Caroline Flint: My hon. Friend makes an important point. One purpose of the eco-town programme is, of course, to provide more housing, but another is to look at what innovation can be brought to bear on making sure we have zero carbon across a whole development and on taking advantage of the opportunities that a site the size of 5,000 households at minimum can give us. We must look at what we can learn from this programme. Already in the last six months we have learned an awful lot about waste, water neutrality and about both the technologies that are currently available and those that are in the pipeline and that could be applied to the eco-town programme. As my hon. Friend says, we must learn about how they could be applied to new builds in existing communities or be retrofitted in existing communities. The benefits of the programme are to do with eco-towns, but they also offer a lot of potential for the built environment elsewhere.

Celia Barlow: Is my hon. Friend aware of the work of Hope 2008, an organisation that supports the voluntary work of the Churches in Britain? Every year, churches, mosques, synagogues and temples perform a very valued service in the community, not least in my constituency of Hove and in Portslade. What will he be doing to support that valuable organisation's work?

David Curry: But is not the recession in the housing market bound to be bad news for people who cannot afford a home at market prices? About 50 per cent. of all affordable homes in Britain are by-products of homes built at market prices, and if the Government do not think a little bit more long term about how those markets might be decoupled so that the social and affordable sector does not depend entirely on the health of the market sector, the misery and misfortune of people who would normally be able to afford a home will inevitably be multiplied in families who cannot afford their home.

Eric Pickles: It is fortunate that the Local Government Association talked to local police and trading standards. The overwhelming majority of health authorities and councils reported pressure on resources. The right hon. Lady cannot kid herself any longer: our towns are nightly turned into vomitoriums, with brawling and bad behaviour. In March 2004, she said that the reforms would create a "continental cafe-bar culture". How did her dream of a nation at ease with itself, gently sipping chardonnay, turn into something more like chucking-out time in Deadwood?

Caroline Flint: The £6.5 billion that we are putting behind the affordable housing programme is an indication of what we are providing—and that is just for social homes for rent. We are also doing work to enable local authorities to use their land assets, through local housing companies, to build more homes. I am sure that the hon. Gentleman would acknowledge that in 1997 we inherited a situation in which £19 billion-worth of repairs had to be made to existing housing stock. We have enabled more than £20 billion to be spent on transforming the living conditions of many social tenants. Sometimes in government, one has to make choices about priorities. Having done that work, we are now in the middle of a programme that will offer many more thousands of homes, with up to 45,000 homes a year being built for social rent by 2010-2011. That is a strong indication that we are able to make tough choices. At the forefront of our minds is the question of how we make sure that everybody, regardless of whether they are home owners, has a chance to have a decent roof over their head.

Iain Wright: My hon. Friend raises an incredibly important point. Through the planning framework and measures such as planning policy statement 3 and others, the local authority is absolutely key to ensuring that it has the homes that it needs in its area, taking into account local circumstances. Shared equity and affordable housing schemes are absolutely key, too. I have been to Warrington and seen what is going on, and I suggest that, frankly, Warrington borough council needs to do more to ensure that those affordable housing and shared equity issues are addressed. I commend my hon. Friend and her constituency neighbour, my hon. Friend the Member for Warrington, North (Helen Jones), on their sterling work on the subject.

Nigel Evans: I beg to move,
	That leave be given to bring in a Bill to make provision for all receipts printed in the United Kingdom to contain a figure for the total amount of tax paid on the goods and services purchased.
	I declare my interest as the owner of a small retail store in Swansea.
	The purpose of the Bill is to ensure that taxation is as transparent as possible. People rightly want to know how their money is spent, but it is also essential for the Government to be open about how that revenue is raised. The Government estimate that the Treasury's receipts for 2007-08 will be £549.9 billion, projected to rise to £575.2 billion next year. The Bill would be particularly relevant to purchases that are subject to multiple taxes and duties. I am thinking specifically of fuel, tobacco and alcohol, which are everyday items bought, at one time or another, by the majority of the population. Each purchase soon adds up. On those products alone, the Government will rake in an estimated £41.2 billion in 2007-08. That is a huge amount of people's hard-earned money, and they deserve to see exactly how it is collected.
	The Bill would benefit the taxpayers of this country and have few, if any, cost implications for major businesses. It would not be an extra burden but merely a hassle-free way of making Government as open as possible. Smaller businesses would not be targeted by any potential legislation; safeguards would be put in place to ensure that they were not adversely affected. Placing the amount of tax generated on each receipt next to the total price would make people better able to see how and where their taxes are collected. It is important that people see where their money is going; in that way, a Government can be held fully accountable.
	In researching the Bill I have consulted representatives of the Adam Smith Institute and the TaxPayers Alliance, both of which have given their unequivocal support to the measures that I seek to introduce. Both those organisations have said that taxation should be more transparent and that people have a right to know how much tax they are paying on a particular product. One of the most interesting concepts that surrounds taxation is that of tax freedom day, which shows how long we have to spend working for the Treasury before our money becomes our own. Last year, that meant working from 1 January until 4 June just to pay our tax bill. It is that sort of realisation that hammers home the need for open and understandable taxation.
	I should like to take the three main products one by one. Fuel duty currently stands at 50.35p per litre and is scheduled to rise by 2p in October of this year—unless  The Independent is wrong, Ministers get their way, and there is yet another U-turn. Then, of course, there is VAT at 17.5 per cent. As with all goods subject to duties—I suspect that a large number of people do not realise this—the Government tax the duty as well. Rather than paying VAT on the basic price of the fuel, we pay it on both the basic price and the 50.35p. In April 2008, according to the Library, unleaded petrol retailed at an average of 107.6p per litre—remember those heady days?—and the average diesel price was 116.5p per litre. According to further figures provided by the Library, the pre-tax price would be 41.2p per litre and 48.8p per litre respectively. Putting those figures into context and including VAT, that means that 62 per cent. and 58 per cent. of the money that people pay for their fuel goes to the Treasury. As people will know, during the past few months, while I have been researching this Bill, fuel prices have risen considerably to about £1.20 per litre for unleaded and as much as £1.34 for diesel.
	My Bill would ensure that people were aware of the rising amount of tax that the Government are creaming off. As a practical example, let us assume that I went to the petrol station and put £20-worth of unleaded petrol in my car. For the most part, the receipt would mention only the amount of VAT but, as I have stated, that is only a minor part of the taxation. Under the Bill, the bottom of my receipt would read, "Total—£20.00; total tax take—£12.40." There would be no hidden costs, and when the Government talked about 2p rises the public would be able to see the exact effect as soon as it came into force.
	Tobacco is exactly the same. For those without a degree in economics, tobacco taxation is especially complicated. There are two duties on cigarettes. As of 12 March 2008, the specific duty is £112.07 per 1,000 cigarettes, there is an ad valorem duty of 22 per cent. of the retail price and—lest we forget—VAT. The Institute for Fiscal Studies has calculated that a packet of 20 king-size cigarettes would be subject to 217.03p specific duty and 109p ad valorem, which suggests that the VAT on a £4.95 packet of cigarettes is 86p. Under the Bill, the receipt would read, "Total—£4.95; total tax take—£4.12."
	The Budget immediately raised alcohol taxes by 6 per cent. above inflation, and there will be a 2 per cent. rise above inflation every year until 2013. That is projected to lead to a £600 million rise in revenue for the Treasury by 2008-09. From 17 March 2008, alcohol duty rates are £14.96 per 100 litres of beer and, on wine and spirits, £21.35 per litre of pure alcohol. To most normal people, such figures and statistics are not grounded in reality and everyday life. The Institute for Fiscal Studies has estimated that we currently pay 30.04p on every pint of beer, 134p on bottles of wine and 548p on bottles of spirits—and then there is VAT. Under the Bill, a receipt for a pint of beer that cost £3 would state, "Total tax take—83p."
	As with any proposed legislation, it is important to think about the unintended consequences. In the scenario that we are considering, the consequences would be minute, if not non-existent. As many hon. Members know, I am a convenience store owner in Swansea. I know that our till can be programmed to produce the type of receipt to which I have referred with minimal cost to the business, and that it could be done during the next servicing of the till. For businesses whose tills are not capable of that change, there would be no requirement to upgrade and no forced time limit, but the Bill would provide that when they purchased new machinery that could produce the requisite receipts, the till should be programmed accordingly. That way, smaller businesses would not be hit with an additional business cost, but naturally progress to the system that I propose.
	Let me take the opportunity to reassure the House that there is no intention to impose any negative effect on small businesses—after all, they employ 58 per cent. of the UK's private sector work force. However, it would be in the spirit of the Bill for smaller premises to display signs that specified the tax take on average cigarette, alcohol and fuel products. By the same reasoning, there will be no additional cost to the companies that make the tills. The technology required for that is already available and used in a huge number of tills.
	That leaves the consumer. I do not believe that a single argument could be made to suggest that the Bill would not be beneficial to consumers. It represents an uncomplicated way of creating a more transparent taxation system, in which the general population can experience at first hand exactly how, where and when they are being taxed. It will lead to greater understanding of the taxation system and, I hope, mark the beginning of the end of stealth taxes, with which the incumbent Government have become synonymous.
	There is not enough time to go through examples of every tax, and no one would want me to do so. [Hon. Members: "Go on!"] Well, we certainly do not have time to go through all the taxes that the Government have introduced since they came to power in 1997.
	The Bill is in the spirit of open government. It is relatively cost and hassle free, and there would be great benefit to the public with no extra burden on them or the retailer. In short, it is a simple measure that would lead to a better understanding of the tax system, allow transparency and provide greater appreciation of how taxes are collected. At a time when hard-working families are feeling the pinch of higher prices on food, fuel, energy, tobacco and alcohol, it is only right that the Government should also tighten their belt, and let the public see the total tax as well as the total tax spend.
	 Question put and agreed to.
	Bill ordered to be brought in by Mr. Nigel Evans, Mr. Brian Binley, Mr. Graham Brady, Mr. Christopher Chope, Philip Davies, Christopher Fraser, Mr. Paul Keetch, Patrick Mercer, Mark Pritchard, Mr. Robert Syms, Ann Winterton and Sir Nicholas Winterton.

Philip Hammond: I note the tone in the hon. Gentleman's final phrase, but I do not know where he has been over the past couple of months. He knows very well that the answer to that question is no. We have said that we accept the abolition of the 10p rate and the simplification of the tax system. That is supportable, but the Government have to ensure that it is delivered in a way that is not carried on the backs of the poorest taxpayers in our society. I would have thought that the hon. Gentleman would have been keen to promote that principle. What I am speaking warmly of is the principle that when parties make manifesto commitments—we could all think of a few of them—it is generally good for the health of the body politic if they deliver on them.
	To be fair to the Prime Minister—I like to be fair to him—he could scarcely have paid a higher political price than he has for his cynical calculation over the income tax changes, creating 5.3 million losers among some of the lowest paid in our society. The Financial Secretary told us that there were very sound reasons for abolishing the 10p rate. The very sound reason that I can determine is that it was in order to fund the 2p cut in the basic rate of income tax that was announced with a flourish at the end of the 2007 Budget speech—a speech that was constructed and intended to be the launch pad for the then Chancellor's bid for the Labour leadership and thus the office of Prime Minister. He thought that, by giving a demonstration of Blair-like ability to appeal to middle English voters, he would appeal to his party as an election winner in the mode of his predecessor. The price that was to be paid by the poorest in our society in the form of a deferred increase was buried in the small print. The plan was to hold the election in the autumn and worry about the mess that fell into place the following spring after the election was safely out of the way. The rest, as they say, is history.
	The fly in the ointment, of course, was the Prime Minister's now notorious inability to make a decision, and the obviously completely irrelevant drop in his opinion poll rating at the beginning of last October—he would give his eye teeth for such a rating now. There we have it: a bungled and deceitful plan foiled by its author's weakness and indecision.
	There is a case for fiscal loosening—tax reductions—when the economy is slowing dramatically. A prudent Government who had put something by during the good years would have made that case in the Budget speech in March this year. But our Government did not put anything by. They did not fix the roof while the sun was shining. Unlike most of our competitors, who put their public finances in order—some of them paid off the entirety of their net public debt—the UK enters the downturn ill- prepared as a result of what the OECD called "excessively loose fiscal policy" during the good years, and even more exposed to financial instability than the US, according to Alan Greenspan.
	Therefore, the Chancellor did not announce a fiscal giveaway in the Budget in March because he had nothing left to give away. In fact, he said in his Budget speech that the best way to help families is not through a further rise in personal tax allowances. Of course, that was before; now he claims that he meant to say that the best way to help families is through a further rise in personal tax allowances. As the temperature started to increase on the Labour Back Benches, the Chancellor pleaded that he had no money, and said that he could not rewrite the Budget. As the temperature reached boiling point when the Bill was before a Committee of the whole House, however, his resolve snapped once again, and a perfect 180° U-turn was executed by the Treasury's now rather accomplished U-turns team—veterans of the non-dom tax, the entrepreneurs relief, the foreign profits tax, and now the banking reforms. The Budget that could not be reopened was reopened; the money that the Chancellor did not have was found; and the barbarians at the gate—I am sorry to refer to the right hon. Member for Birkenhead (Mr. Field) in those terms—were bought off. Or were they?
	The emergency Budget on 13 May plucked another £2.7 billion of borrowing out of the air, and at a stroke reduced the number of losers from the 10p tax debacle from 5.3 million families to just 1.1 million families. But two questions remain to be answered. The first is the one that the Financial Secretary identified from the Treasury Committee's report: what about the other 1.1 million families? On the day of the great climbdown, when the right hon. Member for Birkenhead went to see the Prime Minister, the words being used were "compensation in full backdated for everyone". To date, we have still not heard how the remaining 1.1 million losers will be compensated.
	Secondly, we have not heard from the Government what will happen next year. Will the personal allowances stay at the level of new clause 11, and be indexed in accordance with existing law? Will the additional winter fuel allowance be repeated in future years? Speculation is rife. The Institute for Fiscal Studies calculates that, in the absence of action to extend the effect of new clause 11 into 2009-10 and 2010-11, by 2010—which, as hon. Members will have noted, could be a general election year—some 18 million families would be worse off than they are in 2008-09.
	However, 13 million families who were not losers from the Budget 2007 reforms have none the less gained from the increases in the personal allowance. Do the Government plan to claw back from them in future years, perhaps by adopting proposals along the lines of those of the hon. Member for North-West Leicestershire (David Taylor) in new clause 10, or will they just continue to borrow an additional £2.7 billion a year to fund the tax giveaway and the £600 million-odd required to extend the additional winter fuel payments?

Philip Hammond: Various suggestions are being bandied about. I do not consider it my responsibility to be prescriptive about the solution that the Government should adopt. They dug the hole, and they can jolly well get themselves out of it. What we have a responsibility to do is ensure that the Government stick to the promise that they made to the right hon. Gentleman in the Committee of the whole House and present proposals at the time of the pre-Budget report—as the Financial Secretary to the Treasury has already suggested that they will—to deal with the issue in terms that fulfil that promise. That is the obligation that we must enforce, and that, I think, is the mood throughout the House.

Philip Hammond: The first part of the hon. Gentleman's question was a useful contribution, but the latter part was not, because this is not my hole—I did not dig it—and, as I will now outline, there are many ways in which the problem could be tackled, including through the suggestions of the hon. Members for Birmingham, Selly Oak (Lynne Jones) and for North-West Leicestershire.
	The Institute for Fiscal Studies suggests that some of the remaining losers could be compensated by raising the personal allowance still further or by extending working tax credits to those working 16 hours a week at the age of 21 and over. If the Government want to claw back some of the gain they have delivered this year through new clause 11, they could use a variant on the taper, which the hon. Member for North-West Leicestershire has proposed, although, as the hon. Member for Edmonton (Mr. Love) rightly says, that would be at the cost of making the tax system more complex and expensive to operate, when the original intention was to make it simpler.
	As we know, in Her Majesty's Revenue and Customs, with complexity goes a tendency to make errors, which is bad for the integrity of the tax system as a whole. The IFS says that if the Government chose to freeze the personal allowances at the level introduced by new clause 11 instead of indexing them in accordance with the law under the Income and Corporation Taxes Act 1988, that would be equivalent to a real cut of around £200 and would thus claw back about a third of the gain received by each basic rate taxpayer, leaving about 8.3 million families worse off next year than they are this year.
	There are many different solutions, but we do not have the resources that the Treasury has and I do not pretend to have answers to the dilemma in which the Government find themselves. However, what unites Members in all parts of the House is a belief that something must be done, both this year for the 1.1 million families who are still worse off, and in future years for those who have been compensated by the increase in personal allowance but do not yet know if they will get the increase next year along with the additional winter fuel payments. We are united on that, because it is morally unacceptable to fund a tax cut on the backs of the poorest, and because the Government promised that they would do such a thing—and rebuilding political trust in this country, which is a priority for my party, requires that Governments get into the habit of keeping the promises they make.
	A variety of mechanisms have been suggested, and I commend the Labour Back Benchers who have sought to engage in this debate and remind the Prime Minister of his commitment. Precisely because there are many ways in which the Government can deliver on their promise, I and some of my party colleagues have tabled new clause 4, which I call the insurance policy clause. It is a variant on an amendment that we tabled in Committee of the whole House and it should appeal alike to those who expect the best from the Chancellor and those who fear the worst, because it introduces a sunset provision for the changes to the starting rate unless the Chancellor has by the end of this year laid before the House of Commons a report setting out what he has done, and what he intends to do, to compensate those who are still losers when all the measures are taken together, following the introduction of the measures that the Government are introducing today.
	Our proposal is deliberately not prescriptive. There is no requirement that the Chancellor must take one approach or another. There is no attempt to force him to give his answer today; we accept that he will do so at the time of the pre-Budget report. It will be for the House then to decide whether it is satisfied with the actions he has taken, or proposes to take, as set out in the report that he will be required to make. Given the parliamentary arithmetic—unless the rate of by-elections increases a little between now and the end of the year—that will mean in practice that he must satisfy the 50 or 60 Labour Back Benchers who have been most concerned about, and active on, this issue that he has in this autumn's pre-Budget report delivered on the commitment to compensate all the losers.
	All those who believe that a solution for the future has to be found and announced in the pre-Budget report, as well as those who doubt the Chancellor's commitment or ability to deliver and those who do not, should be able to coalesce around this insurance policy clause. If the Chancellor can satisfy the House by the end of the year that he has delivered, in his pre-Budget report, a lasting and satisfactory solution that adequately compensates those who have lost out, he will have no difficulty in obtaining his resolution and thus overriding the sunset provision. But if he should be tempted to turn his back on this issue, or if the Prime Minister should be tempted to renege on his earlier commitments, the sunset clause will provide a mechanism for a parliamentary check to keep them both honest.
	I sincerely hope that Members on both sides of the House will support new clause 4 to strengthen the House's power to determine the outcome of this mess in due course. It is a mess in more ways than one. One of the benefits of the 2007 proposals that was trumpeted by the Chancellor at the time, and spoken of in warm terms by the Financial Secretary in consideration of the National Insurance Contributions Bill, was the alignment of national insurance and tax thresholds. We were told that that would bring greater simplicity to the tax system and reduce cost burdens for businesses and taxpayers alike. It was a strategic step in what the Financial Secretary called the significant simplification of the tax and NI system. Indeed, she told the House during consideration of the Bill that the alignment of NICS and higher rate income tax was the "main purpose" of the Bill. I am sorry to have to tell the House that, if that was the main purpose, the House's time has been wasted. Thanks to new clause 12, as the Government claw back the benefit of the increased personal tax allowances from higher rate taxpayers, the higher threshold for national insurance contributions will remain, so people will still pay more in national insurance, but the threshold for the higher rate of tax is dropped, reintroducing the complexity—the removal of which was claimed to be one of the principal benefits of the 2007 package.
	New clause 6 seeks to shine the spotlight on the misalignment of tax and national insurance thresholds. It would require the Treasury, in any year when the thresholds are different, to report to Parliament explaining why, setting out its plans for convergence in the future, and setting out the costs to employers and the HMRC of a divergent system and the savings that would be made by convergence. The Government have made the case that a simpler tax system is a better one. That is ironic, in view of the fact that this is the same Government who have given us the longest tax code in the world and made our tax system one of the most complicated, but on this issue they were right. If it were not so debilitating to Britain's reputation, it would be laughable that just about the only effective measure that the Government have introduced to simplify the tax system has unravelled under the weight of their incompetence.
	Having flagged up the significance of convergence and its economic benefits, the Government should accept new clause 6, with its underlying assumption that a system of converged thresholds remains the objective, and they should be prepared to explain to Parliament, on each occasion that they do not achieve that objective, why they have not done so and what steps they will take to move to convergence, as well as revealing the costs of divergence. I would be interested to hear from the Financial Secretary whether the Government are still committed to the objective of aligned thresholds, because her language of late has suggested a desire to move the thresholds closer together, rather than the original and meaningful purpose of aligning them completely.

Mark Field: Does my hon. Friend agree that one of the difficulties for the Government even of the converged thresholds initiative, which we entirely agreed with, was that it was not going to be revenue neutral at that stage? Perhaps he will explore the subject with the Minister to try to ensure that so far as hard-pressed middle-earning taxpayers will pay for the result of that convergence, they will at least have some of the disadvantage brought back because the confusion to which he has alluded will be sorted out.

Philip Hammond: I know that my hon. Friend served with distinction on the Committee that considered the National Insurance Contributions Bill. He is well-versed in these issues. The Financial Secretary will have heard his comments and, I hope, will feel able to respond to them in her substantive speech.
	Let me move on to new clause 1A. There is a theme among these amendments and new clauses of seeking to strengthen Parliament's control over the process. New clause 1A seeks to strengthen Parliament's knowledge and oversight of the Treasury's projections in a situation where the state of the public finances is deteriorating rapidly. Traditionally, the Chancellor gives to Parliament statements of the Treasury's forecast of economic growth and public borrowing twice a year—at the pre-Budget report in November and at the Budget in March. In normal times, that is just about sufficient. However, when the public finances are deteriorating rapidly and economic growth projections are being downgraded regularly, that is simply not good enough. Parliament is being kept in the dark.
	At the time of the pre-Budget report last year, the Chancellor said that the Government would borrow £36 billion and that growth this year would be 2 to 2.5 per cent. In the Budget, just four months later, he said that he would borrow £43 billion—£7 billion more—and downgraded his growth forecast to 1.75 to 2.25 per cent. Since then, the continuing effects of the credit crunch and the oil price shock, all of which Britain is ill-prepared to absorb, have led every commentator, including the Bank of England, sharply to downgrade their expectations of economic growth. With a downgrading of the growth forecast invariably comes a downgrading of tax receipts and, all other things being equal, an increase in the expected level of borrowing.
	I concede that the territory is complicated. The Government benefit from higher tax receipts from North sea oil and gas—I am sure that we will hear something about that as Report stage unfolds. So long as unemployment does not begin to rise rapidly, the automatic stabiliser of increased welfare spending will not necessarily manifest itself. The Government have now stated that they will borrow an extra £2.7 billion for the 10p compensation package. The picture is complicated and it is simply not good enough, when the Government is led by a Prime Minister who claims to want to reinforce the accountability of the Executive to Parliament and to build a new relationship between citizen and Government, for them to keep both Parliament and the population in the dark.
	All leading City commentators and the Bank of England have downgraded their economic forecasts. We know that the Treasury will have revised its forecast, but that revision remains locked away in the Chancellor's safe. Parliament is left in ignorance, as are the people. They are left ignorant of the scale of the slow-down in the economy that is expected by the Government and of the size of the increase in public borrowing that that will entail.
	New clause 1A enshrines the principle that when income tax changes are made in-year—an unusual situation that implies very unusual circumstances—the Government should publish an updated report on economic growth and public borrowing so that Parliament, as well as the nation, has an authoritative view of the bigger picture when approving the changes that it is asked to make to income tax. The established principle is that tax changes are announced only in Budgets and pre-Budget reports and that growth and borrowing are forecast at the same time. If tax changes are made at other times, the updated forecasts should be set out alongside them for the sake of transparency and completeness.
	I shall conclude by referring briefly to new clause 10 and amendments Nos. 102 to 109, tabled by the hon. Members for North-West Leicestershire and for Birmingham, Selly Oak. As I have said before, we believe that it is the Government's responsibility to deliver on their promises to compensate all those who have lost out from the abolition of the 10p rate of tax.
	As I said earlier, the Prime Minister, when he introduced the 10p band, claimed:
	"When we make promises, we keep them".
	Last May, he faced a Back-Bench rebellion and made another promise—he promised the right hon. Member for Birkenhead that he would compensate all the losers in full. So it is disconcerting that this morning's edition of  The Sun should report that he had
	"slammed the door on help for 1.1 million low-paid workers hit by the Government's 10p tax fiasco."
	The headline says that there will be "Not a Penny More" aid the for 10p tax rebels, so the hon. Members for North-West Leicestershire and for Birmingham, Selly Oak deserve praise for maintaining the pressure. There are advantages and disadvantages to the solutions that each proposes, but they are a contribution to the debate—in stark contrast to the reported slamming of the door by the Prime Minister.
	Our view is that this is the Government's problem, and that it was created by the Prime Minister's machinations last year. It is for them to clean up their own mess, by coming forward with detailed proposals to help the remaining 1.1 million losers and explaining how they will continue support into the future—but compensate the Government must if they are to deliver on the promise that they made. They must make those proposals known to Parliament, and not only in private to their Back Benchers. That is why we believe that new clause 4 is the best way forward: it is a sunset provision that gives the Government the latitude to explore an optimum solution to delivering compensation, but one that will give Parliament the final say as to whether the proposals are adequate.
	I sincerely hope that hon. Members of all parties who are determined to ensure that the Government deliver on the promise given to the right hon. Member for Birkenhead will support new clause 4 in the Lobby tonight. May I give you notice, Mr. Speaker, that with your leave I shall be seeking a separate Division on new clause 4?

David Taylor: I shall be pleased to answer that question, and will do so almost immediately.
	The abolition of the 10 per cent. rate adversely affected 5.3 million people, and the Chancellor's statement on 13 May more than fully compensated 4.2 million of them—in fact some of them had not quite suffered a hit of £120—but 1.1 million people remained, and my new clause 20 is designed to compensate that group. What will it cost? It is a matter of relatively straightforward and simple arithmetic. The maximum uncompensated loss at present, which went from 0 to £240 to 0—from £7,200 and so on—has been reduced by £120, so the uncompensated loss runs from 0 to £120 to 0 again. The average uncompensated loss, which my new clause will address, is around the £60 mark as far as we can tell: thus, 1.1 million people at £60 is £66 million. That is not an enormous sum; it is the kind of amount that the Chancellor might find down the back of the metaphorical settee when announcing his Budget. It really is a trivial sum. It is about 100th of 1 per cent. of his total tax take, not a major hit on the level of taxation. At only £66 million it is very good value, and I am sure that the Chancellor and his representative on the Treasury Bench must be tempted to snatch my hand off at this point.
	The Treasury Committee also had its doubts. I have reflected on its excellent report, and I am pleased to see that its Chairman, my right hon. Friend the Member for West Dunbartonshire (John McFall), is in the Chamber. There is a lot of good reading in the report, even for the 640 non-accountants in Parliament. We do not necessarily find out who the culprit is at the end, and there is not much love interest, but by and large it is an excellent report that people can read in the recess, which starts three weeks today. I should like to mention two of its conclusions. The first is conclusion 20 on page 111, which states:
	"There were consequences from the abolition of the starting rate of income tax. The Government has attempted to tackle this problem through the 13 May announcement. However, this has still left 1.1 million households as losers. There is a pressing need for the Government seriously to examine ways in which the remaining losers can be compensated."
	That is precisely and entirely the object of new clause 20, to which I am speaking. The report says:
	"The Government must set out proposals to achieve this by the time of the 2008 Pre-Budget Report",
	which will be in the autumn.
	The other part of the report that I wish to quote mentions the £2.7 billion cost. A lot of it was dead weight, although the dead weight was dressed up as an attempt to compensate tens of millions of families for higher fuel bills. That is fine; I support that, and that is why I shall vote for new clauses 11 and 12. The report says:
	"Even though the £2.7 billion was not substantially well-targeted, the raising of personal allowances announced on 13 May was a welcome step towards creating a simpler tax system".
	The phrase, "not substantially well-targeted", was rather kind. I think that there may have been heated debates about that in the Committee. I would love to get on to the Treasury Committee; that is a bid for membership, although the Environment, Food and Rural Affairs Committee, which I have served for seven years, is a fine Committee. I guess that there were heated debates in which a rather stronger phrase than "not substantially well-targeted" was used. The phrase is much too kind, because the approach that the 13 May statement took towards dealing with the uncompensated 1.1 million people was like using a blunderbuss at Bisley, as I heard someone on the radio say this morning. I agree with that statement, not least because I made it myself.
	The £2.7 billion cost can be broken down into £2 billion for the 16 million or so non-losers and the 4.2 million people who were fully, or even more than fully, compensated; there is also the issue of partial compensation for 1.1 million people, which I am trying to address now. There was always a trade-off between targeting and complexity; we know that. Such trade-offs are endemic in the taxation and welfare systems. We have to deal with that in whatever way we can. The Chancellor faced a dichotomy—a clear choice. He could go for a simple system, perhaps with a simple flat-rate allowance, but that would be expensive because of the dead weight and the lack of tapering. Otherwise, he could go for a slightly more complicated system that was cheap, focused and targeted. I think that that is a fair description of new clause 20, which I am promoting.

David Taylor: I do, and the new loser bands—the bands for those who have residual uncompensated losses—apply to those with an income from around £6,400. The bands still run up to £7,600, and now, because of the £120, they taper out at £13,600. That is the umbrella of income under which people still have uncompensated losses. We are talking about a maximum of £120, which is still at that £7,600 point. The figure involved is 1.1 million people; we are not talking about drips and drabs. Typically, constituencies represented by Labour Members of Parliament have 2,000 or perhaps even 2,500—in some cases there are 3,000—such individuals or families. To Members of Parliament, £120 a year may not seem a substantial sum, but to families who are up against it, with high and rising core prices, even an addition of £10 to their monthly income can be helpful, crucial or valued.
	There was a choice, the Chancellor went for the simple and expensive option, and I am effectively adding to new clauses 11 and 12 my own humble attempt to refine the announcement in a way that would deal with those 1.1 million people. My scheme would build on the announcement, and it is, I hope, simple, accurate and inexpensive: £66 million seems to me to be good value if it gets rid of a political, financial and fiscal problem. There are plenty of sticks lying around for the electorate to beat us with, but let us at least put one of them on to the bonfire.
	My purpose in tabling new clause 20 was not to seek a method of beating the Government in the Lobby. I have not been the most persistent loyalist in recent years; I have had my concerns about a range of Government policies, and I have expressed my unhappiness through the votes that I have cast on a variety of topics. However, on this issue, my purpose was to ensure that the matters were debated and that an option was aired for the Chancellor to consider when he analysed the background to his pre-Budget report. I am not wedded to the scheme; it is just a suggestion.
	The Treasury Committee received from the Institute for Fiscal Studies and others a range of ideas, and equally they might work. They have their costs, weaknesses and strengths. I believe that my suggestion would work, and I commend it to the House. I reserve the right to press the new clause to a Division if necessary, but when the Minister responds, I want to hear an absolute copper-bottomed, concrete-rooted guarantee that the Government, and the Treasury team in particular, are focused on those 1.1 million people. There are perhaps 2,500 such people in the Minister's constituency, and they are important.

David Taylor: My hon. Friend and I are both regulars at Treasury questions, and we often express such sentiments and point to the fact that if taxation evasion and avoidance in the UK economy were more effectively tackled, it would produce a stream of revenue that would resolve some of our problems in respect of council housing, free accommodation for those in social care and so on. However, Mr, Deputy Speaker, I sense that you want me to return to the track and not to be seduced by the pretty scene that my hon. Friend paints for me.

Jeremy Browne: In a manifestly sincere and decent speech, the hon. Member for North-West Leicestershire (David Taylor) said that one has to read to the end of the Treasury Committee report before finding out whodunnit. I can reveal to anybody who does not wish to read through the entirety of the report that we all know who committed the crime on this occasion: the Prime Minister.
	The writing of the history of the Brown premiership may be quite imminent. I am not given to betting—not least because it is a good way to lose money—but I see that the shortest odds on the Prime Minister's time of departure are for the final quarter of this year and that the second shortest odds are for the third quarter of this year, the quarter that started today. The end may be fairly imminent. When the history of the Brown premiership comes to be written, people will offer many explanations on how he came to be such a disappointment in the post. They will say, for example, that he should have called the election in November and that that was a great missed opportunity. They will say that the lost tax discs were indicative of a wider malaise in the Government and that the visit to Iraq during the Conservative party conference made it hard for the Prime Minister to sustain the position that the era of spin had come to an end. All kinds of explanations will be offered on why he failed to live up to expectations, but the one that will last longest in the public mind—because it is not to do with Westminster political to-ing and fro-ing, but with the everyday lives of millions of people—will be the fiasco of the doubling of the 10p tax rate.
	Let us look back, as the hon. Member for Runnymede and Weybridge (Mr. Hammond) did, to the announcement that the Prime Minister made in his final Budget speech as Chancellor of the Exchequer. As the Treasury Committee rightly says, there are huge dangers in seeking to pull rabbits from hats, but that is precisely what the then Chancellor sought to do. It was a manifestly political move—about his positioning, his inheritance and his wanting to be perceived as the rightful heir to Blair, a mantle that he was keen to claim from the right hon. Member for Witney (Mr. Cameron). Labour Back Benchers cheered with great fury. I have been a Member of Parliament for only three years, so I have not had the opportunity and privilege of witnessing many Budget speeches. The Budget speech that I am talking about was significant, because it was the final one of an extremely long-standing Chancellor who had served in office for a decade. We remember that the Labour Back Benches resembled a football stadium after a winning goal had been scored in the last minute. There was a sense of euphoria that their man had come up with such a brilliant scheme—that he had out-manoeuvred the Conservative party and made it inevitable that he would become the Labour leader and Prime Minister and that Labour would go on to win the next general election.
	That was emphatically the mood among Labour Back Benchers on that day, so it is hard to believe, looking at them now, that that was ever their belief. As far as I can work out, the only Labour Back Benchers who now attend these debates are those who are critical of Government policy and wish to express their criticism. I am happy to give way to any Labour Back Bencher who thinks that this policy has been handled with perfection throughout the process, and perhaps we can all learn from that. I suspect, however, that there are two types of Labour MP—those who openly say that it was a fiasco and those who believe that it was a fiasco but do not say so openly.
	The tragedy for the Prime Minister is that this is the man who said,
	"best when we are boldest...best when we are Labour",
	yet has fallen down in trying to ape and emulate the Conservative party in his appeal to the population as a whole. He wanted to be the Chancellor and the Prime Minister who reached the promised land of the 20p basic tax rate, thereby managing to achieve what the Conservatives did not achieve in 18 years in government. Even his heroine, Margaret Thatcher, whom he invited to Downing street to celebrate her achievements, had not managed to reach the 20p basic tax rate, yet here he was showing how it could be done. It was an extraordinary measure for him to implement. So overtaken was he by this sense of destiny—the sense that he could square the circle, rise above party, become the father of the nation and unite all these discordant political threads—that he completely failed to notice that 5.3 million people, the poorest people in the country, would lose out as a consequence of his policy.

Jeremy Browne: I will reveal on some other occasion what the website said about the right hon. Member for Wokingham (Mr. Redwood), but it was extremely positive.
	What I am saying is relevant, Mr. Deputy Speaker, because the motivation for doubling the 10p tax rate was entirely party political. It had nothing to do with alleviating poverty. Anyone could see with only a moment's examination of the policy that it was going to be disadvantageous to millions of the poorest citizens in the country. With respect, if my analysis is somewhat party political and partisan it is because that was the Chancellor's precise motivation when he introduced the policy.
	Labour Back Benchers cheering euphorically and waving their Order Papers was phase 1 of the Labour party response. Phase 2 was the rebellious phase, when the right hon. Member for Birkenhead (Mr. Field) marched the Government to the top of the hill, in effect taking on the role of Prime Minister and deciding Government tax policy from the Labour Back Benches. It was an extraordinary act of revenge on his long-term nemesis that was interesting to watch and enjoy from these Benches. That rebellion was extremely successful. We then had a mid-term mini-Budget in which what the Treasury Committee describes as
	"probably the least bad option"
	was brought forward by the Chancellor despite protestations that he would not do so.

Jeremy Browne: We had a long discussion in Committee on precisely that point and I can repeat it for those who were not present, although the hon. Gentleman was. Our party policy is for a basic rate of 16p in the pound. We believe that people on low incomes are paying too high a proportion of their income in taxation. We do not agree with the Conservative party policy position—that the Conservatives will match whatever level of tax the Labour Government set. That is not right or responsible, so we are in favour of lower marginal rates of tax for people on low and middle incomes. I will revert to some of the other proposals shortly.
	Let me complete the phases of the Labour rebellion. We began with the joyous response, then we had phase 1 and we moved to the third phase, which was the climbdown. Now we are in the fourth phase, which is rebellion rising up again. That must be a source of great dismay to the Financial Secretary and the Prime Minister, because I suspect that they thought that the issue had been quietly put to one side. Eighty per cent. of those who were losers—roughly speaking, about four out of five of the losers from the doubling of the 10p rate—had been bought off.
	What is more, millions and millions of people who were net beneficiaries had been given even more money, although they will all have to repay it eventually. Indeed, we will all have to repay it eventually, because borrowing is, after all, only deferred taxation. In the short term, however, people have more money in their pockets. I assume that the calculation that the Chancellor and the Prime Minister made was that if they could buy off 80 per cent. of the losers, the remaining 20 per cent. would fall by the wayside and not many people would notice. By definition, they were the poorest 1.1 million people, and in many cases probably do not have the loudest voices or the best opportunities to make their grievances known. That was the political calculation.
	Of course, I acknowledge—others have made this point, including the hon. Member for North-West Leicestershire (David Taylor)—that there is always a difficulty on these occasions over whether to go for the simple, easy-to-understand, less well focused and therefore possibly more expensive option or the complex but more targeted option. What the hon. Gentleman has proposed, aligned with what the Government propose, means that they are jointly going for the option that is both expensive and complex. That is probably quite a messy solution, although if they cover all their bases—that would be the result of the hon. Gentleman's amendment—they can ensure that everybody is fully compensated. The obvious question is why we got ourselves into this mess in the first place, and that is what I have been trying to help the House understand in the past 10 minutes.

Lynne Jones: I would like to make it clear to the House that I have never in my life waved my Order Paper—and certainly not on Budget day 2007. To me, the abolition of the 10p rate would only have been acceptable had it been replaced with a zero tax band for the same amount of income, and I commented to that effect on the day.
	The majority of the British people have an innate sense of fairness. Whether they vote Labour or not, they see the Labour party as the party of fairness and they look to a Labour Government to implement their policies, including fair policies on taxation. People were so outraged when they learned that some of the poorest people were going to lose out as a result of the abolition of the 10p tax rate because it offended that innate sense of fairness. That sentiment applied not just to the people who were to be worse off, but was shared by many of their friends and neighbours and others who knew about their situation. That is why I supported the amendments proposed by my right hon. Friend the Member for Birkenhead (Mr. Field) in 2007 and why I wrote to the Government expressing my concerns.
	My amendments Nos. 102 to 106 would enable someone who had lost out from the abolition of the 10p rate to opt to be taxed at that previous rate. I have to admit that I did not think up that idea myself; it was based on ideas submitted in a letter to the  Financial Times on 8 May by Mr. John Curran. At that time, I felt that it was worthwhile to put that option to the Chancellor for consideration. It was certainly not intended as a permanent solution, but as a stop-gap that would have precisely targeted all the losers, so it would have been much more cost-effective than the Government's eventual announcement. I have to say that I wrote to the Chancellor on 9 May; obviously, my letter had not reached him by 13 May, when he announced that the Government's proposed solution was to raise the tax threshold. Despite that alteration, we found that 20 per cent. of the losers were still waiting to be compensated, so I decided to table my amendments and to support the new clauses proposed by my hon. Friend the Member for North-West Leicestershire (David Taylor) in order to flag up the fact that it was unfinished business.
	We cannot continue with the situation in which 1.1 million families are still losing out from the measure, so I, too, seek cast-iron assurances that the Government will fix that. I wrote again to the Chancellor, and last night received a letter from my right hon. Friend the Financial Secretary. I accept her explanation that it would be difficult for people to identify whether they would gain from my proposals if their terms were combined with the Government's raising of the tax threshold. I will not, therefore, press my amendments, but it is right to debate the matter and for Labour Members who feel as I do to express their concerns and to look to the Government to provide solutions.
	At the end of his speech, my hon. Friend the Member for North-West Leicestershire had an exchange with my hon. Friend the Member for Luton, North (Kelvin Hopkins) on the need to overhaul the tax system to make it fairer. I believe that far too many people on low incomes pay tax, and I find it unacceptable that people on less than half average earnings pay income tax. If we want a fairer tax system, we must raise substantially the threshold at which people start paying tax. I accept that that would have ramifications higher up the income scale, so a smooth clawback from high earners, in as simple a way as possible, would be necessary.
	Like my hon. Friend the Member for Luton, North, I would look to a Labour Government to implement a fair tax system, which takes as many people as possible out of tax altogether, and which is progressive up the income scale. That would require at least one further rate of income tax—as long as rounded figures such as 20, 30 or 40 per cent. were maintained—and I would also advocate a 50p rate for those earning more than, say, £100,000 a year. In that way, we could respond to the express view of many people in society that a Labour Government should implement fair taxation.

John Redwood: I urge the Government to think again, and more promptly than their timetable suggests. I do so because many of our constituents are worried sick about the state of their family budgets. Food prices are rising rapidly, and the combination of tax increases and price increases is putting enormous pressure on family energy budgets, especially to meet the fuel bills for motor cars, which many people need to get to work or to the shops, especially in rural areas. At this juncture, the last thing that such people need is extra pressure on their respective budgets from the kind of tax increase that we are discussing. The Government would be well advised to think again about their timetable, and to consider whether they can go further to respond to this very serious and good debate—with perhaps one exception from the Liberal Democrat Benches—and to make people feel a bit easier about their future and their family budgets.
	My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) has asked the two crucial questions. The first question is: what will be done next year? Is the package for one year only? Surely when people are worried about whether their income will stretch, they need some earlier indication of what might happen in the following year. The second question is more urgent and important today: what will be offered to the 1.1 million people, who, as the Government admit, along with their critics, are losing out from the mishandled package of tax changes? Can there be some statement to reassure them? I was disappointed that the Minister did not choose to inform the debate more at the beginning. Paradoxically, that has required her to listen to rather more critical comments—and I suspect there may be further such comments if other Members catch your eye, Mr. Deputy Speaker—before beginning to allay some of the fears that have been expressed. When I offered her an opportunity to reaffirm the promise that I thought the Prime Minister had made to the right hon. Member for Birkenhead (Mr. Field) that all the losers would be compensated, it was with regret that I heard that she could not do so. There seemed to be some backsliding.
	As I listened to the very reasonable and sensible speech of the hon. Member for North-West Leicestershire (David Taylor), who came up with a relatively cheap package, I did not see the Minister leap to her feet and say that it would not do the job. Nor did I see her leap to her feet and say that, compared with the £2.7 billion that the Government have managed to find from borrowing to deal with the first part of the problem, this was a very cheap solution, and that she would either adopt it or view it very sympathetically. Many Members, understandably, will feel that the hon. Gentleman deserves better. I hope that in her response the Minister will consider his suggestion carefully, and will tell us either that there is a cheaper and better way of delivering what is needed, or that the Government will adopt it.
	I understand why my hon. Friend the Member for Runnymede and Weybridge, who has no access to the Treasury computer, the Treasury models, the Inland Revenue figures and so forth, cannot come up with a scheme that would fill the hole in the cheapest way possible. I also understand why, conscious of the massive over-borrowing that is currently taking place, he is reluctant to offer any proposal that would add to that, when it is the Government's duty to present the House with such a proposal. I hope that the Government will indeed present proposals to try and satisfy those of us who are worried about their over-borrowing by reducing some of their waste and unnecessary spending, along with the proposals that are so desperately wanted by Members throughout the House to help those on the lowest incomes in society who have been at the wrong end of the measures that we are discussing.

John Redwood: The hon. Gentleman is quite wrong. The Leader of the Opposition made a careful and sensible speech for someone who had not had a chance to read the Budget. Everybody else who spoke in the debate had had a chance to read bits of it, and as we well know it is necessary to read the Budget as well as to hear it in order to understand what is going on. For understandable reasons, the then Chancellor was much prouder of the tax reductions than he was of the tax increases, and that needed to be filleted out from the documentation. I am just explaining what happened at the time.
	The Government have had a long time to consider the sensible criticisms that were made at the time of the Budget and subsequently. By now, Ministers must have done an awful lot of homework and figure-work on this problem; they must have been worrying away for weeks, if not months, on the 1.1 million. Therefore, I urge the Financial Secretary to share a bit more of her thinking with us in order to allay the fears among her own Back Benches and to deal with the sensible criticisms voiced by the Opposition. Above all, she needs to say to the 1.1 million people not just that the Government wish to be on their side, but that they will take a practical measure to try to assuage some of their grief.

John McFall: I am pleased to be speaking on behalf of the Treasury Committee. On Second Reading, I said that the Committee would undertake an inquiry arising from the controversy over the removal of the starting rate of income tax. The result is the report that was published on Saturday, which, I am glad to see, has been welcomed in the House and outside. It is a complex document, reflecting the complexity of the subject. It includes more than 70 pages of the report and recommendations and more than 170 pages of evidence, both oral and written.
	I had best refer Members to the summary, which documents the five main subjects that we considered. The first was low-income households and the abolition of the starting rate. We said that the losers were those with a small taxable income for whom the loss of a small amount of money was significant when managing a budget at a time of rising prices, particularly rapidly rising energy and food prices.
	Secondly, we considered the options for 2008-09 and the changes made on 13 May. The problems arose from a removal based in the tax system, and our main recommendation is that the solution should be required to be in the tax system. Thirdly, we looked at the broader context and the poverty targets, to which I shall return later. Fourthly, a big lesson for the Government is the need to get the process right. They need to learn the lessons from the budgetary process and to use the pre-Budget report as it should be used. They should not turn the pre-Budget report into an early Budget.
	Finally, we considered the way forward, which concerned no reforms other than those to the tax system. The 15 May announcement on increased personal allowances is, the Committee says, a welcome step to a simpler tax system with fewer of the low-paid paying income tax. The Treasury should resist introducing further complications to the system. Every effort should be made to avoid returning those who have been taken out of the tax system by the 13 May changes back into the system.
	I want to concentrate on three brief points. The first is the relationship between tax and poverty priorities. The second is the use of the tax system for further compensation measures. The third is the provision of information by the Treasury and the role of the pre-Budget report.
	On the relationship of tax and poverty priorities, our report's detailed analysis makes it clear that the losers from the removal of the 10p band do not equate to the very poorest in society. However, we also highlighted the danger that the household analysis may assume income-sharing in households that does not take place. The Government must pay heed to that.
	Also, the tax system needs to be considered alongside the welfare system. The system as a whole is not working as well it should, as is shown by the rise in child poverty in 2006. That figure rose by 100,000 to a total, before the deduction of housing costs, of 2.9 million children in poverty. Moreover, there was a sharp rise in pensioner poverty in 2006-07: before housing costs were deducted, that total rose by 300,000. Those figures reversed the tremendous improvements that this Government have made in both areas since 1997, and it is important that we get the Government to return to achieving success in the broader context when it comes to poverty.
	The Committee received powerful evidence that successes in combating poverty have concentrated on the non-working poor. Many people still find that work is not a pathway out of poverty. In-work poverty is an important problem, as we highlight in our report.
	The Government must solve the running sore of the abolition of the 10p tax rate, not least so that they can concentrate on more effectively on their long-term priorities in respect of poverty. The Committee made one recommendation that did not get as much attention at the weekend as others did. We proposed that a poverty commission should be established to help with the focus on poverty. The Pensions Commission, chaired by Lord Turner, achieved a lot. It was an independent, non-political body and its recommendations to the Government were listened to. I feel that a poverty commission could be a similar organisation: it would comprise independent and non-political people, and would provide an important way of keeping the Government on target. After all, this is the only Government to have set out an ambitious agenda to eliminate child poverty by 2020. If the Government are to achieve their ambitions by 2010, they will have to meet stretching targets: indeed, to do so, they would have to reduce child poverty by 300,000 every year over the next four years. That is ambitious, but they must not give up on that aim. It is important that they continue to concentrate on it, and so I hope that they will take that recommendation very seriously.
	Our second recommendation has to do with the use of the tax system for further compensation measures. The Committee report identifies further developments of the tax credits and benefits system that may be needed, in the medium term and beyond, to tackle poverty. However, we are clear that the only way to reach all those who have lost out as a result of the removal of the starting rate—and to compensate all losers in low-income households—is through the tax system. The Government should not meddle with tax credits or anything else, as compensation should be provided through the tax system.
	We identify a range of options through the tax system: none is perfect, but we give the Government an option menu. I concur with my right hon. Friend the Member for Birkenhead (Mr. Field): this subject was discussed on Second Reading, and if the Government had waited, that might have allowed them to find a more measured way to tackle the problem. However, we have to deal with reality, and my message to the Government is that any solution must be achieved through the tax system, in a measured and considered way.
	We do not identify a preferred solution, as the Treasury is best placed to do that. However, the key point that we make is that the changes announced on 13 May and implemented by the proposals before the House are the start of the process, not the end. It is very important that the Government take that on board.
	My final point has to do with information and the use of the PBR. We seek to identify lessons from the 10p tax saga for future Budget policy making, and draw two main conclusions. First, the Government must be clearer and more open about the distributional effects of their policies, and we recommend that a household impact assessment accompany each Budget and PBR. If such an assessment had been compiled when Budget 2007 was produced, the Treasury Committee would have had time to study it at our leisure. We would have identified both winners and losers, and we would have known where we were going. Any future changes must delineate the winners and losers, as otherwise we will return to opaqueness and confusion.

Jane Kennedy: No. I shall deal with the opportunism that I have heard from the Opposition parties in a moment.
	I was grateful to my hon. Friend the Member for North-West Leicestershire (David Taylor) for the terms in which he spoke, and I shall use the same tone in my comments. The uncharitable might argue that those on the Treasury Bench had afforded Opposition parties the opportunity to make hay with this subject. The amendments that they have tabled are all about producing reports, and my right hon. Friend the Member for Birkenhead (Mr. Field) was right to draw attention to the speech made for the Liberal Democrats by the hon. Member for Taunton (Mr. Browne). If he had heard the speech in favour of the 10-minute Bill earlier this afternoon, my right hon. Friend would have heard much more interesting and entertaining proposals about transparency than the hon. Gentleman managed.

Jeremy Browne: I am very grateful. I was particularly keen to intervene because the point that the hon. Member for Runnymede and Weybridge (Mr. Hammond) has just made is entirely legitimate, and applies equally to amendment No. 6. If the assurances that the Minister is giving Labour Back Benchers are to be taken on face value—there is no reason to assume that they should not—she has no reason to oppose new clause 4, tabled by the Conservatives, or amendment No. 6, tabled by the Liberal Democrats. The only reason for her to oppose them would be if, for some reason, there were good reason to believe that her offers should not be taken at face value.

Jane Kennedy: I should tell the House that I believe that new clause 6, tabled by the hon. Member for Runnymede and Weybridge, is technically flawed. [Hon. Members: "Why?"] I can tell hon. Members why. Subsection (1)(b) states that the basic rate limit is set out in section 10(2) of the Income Tax Act 2007, but in fact it is in section 10(5). Also, the new clause does not recognise that with tax calculated annually and national insurance weekly, it would be rare for the two to be exactly aligned. Requiring a report every time they were not aligned is unnecessary. I hope that the hon. Gentleman will accept that.
	Turning to the substance of the debate, we have focused on what needs to be done to address the problem described by my right hon. and hon. Friends. Amendments Nos. 102 to 109 envisage two parallel tax systems. One would have three rates of tax—10 per cent., 22 per cent. and 40 per cent.—and the other would have two rates of tax—20 per cent. and 40 per cent. What I am saying formed the substance of the letter that I sent to my hon. Friend, but it is of value to explain why the amendments would not work, although we have considered them. Individuals could choose to be taxed under one or the other system at any time during the tax year. They could change their mind at any time over an unspecified period. We have estimated that the amendments would cost about £1.8 billion.
	I am afraid that the proposal would prove to be unworkable for individuals, for employers and for HMRC. Two parallel tax systems would require employers and HMRC to set up a new system over and above the one currently in place. That in itself is doable, and if it were the right thing to do, it might be necessary to do it, but, most importantly, I am not convinced that individuals who have lost out from the changes would find such a tax system beneficial. Two different systems would be confusing and impossible to understand for some taxpayers and hon. Members will acknowledge that those in the lowest income groups would find it particularly difficult to judge which system would benefit them. HMRC would simply not be in a position to give advice on such decisions.
	I very much appreciate the manner in which my hon. Friend the Member for North-West Leicestershire spoke to new clause 20. The one thing about which I agreed with the hon. Member for Taunton was his description of my hon. Friend's speech. My hon. Friend spoke with humour but passionately about what is clearly a serious issue not just for him for many of my right hon. and hon. Friends. New clause 20 is superficially attractive. We have had an opportunity to talk through some of the detail. My right hon. Friend the Chancellor made it clear in his evidence to the Treasury Committee that we had looked at what could be done through tapering, but we had to reject it for this year. For instance, I am advised that the new clause would affect 7.1 million taxpayers. I want to explain why that is the case. It would require a further 5.6 million people, most on low incomes, to complete a self-assessment tax return.
	There are 7.1 million people with incomes between £6,400 and £13,600 who would benefit from the extra personal allowance proposed by my hon. Friend the Member for North-West Leicestershire. The average gain for those on lower incomes would be around £60, with an overall cost of some £450 million, because the number of people who would benefit goes so much wider. That is the advice that I am given.

Jane Kennedy: I have several hon. Friends who are obviously hoping to offer help at this point.

'(1) The amendments made by the provisions of this Act specified in subsection (2) shall cease to have effect at midnight on 5 January 2009 unless the conditions set out in subsection (3) have been satisfied.
	(2) The provisions referred to in subsection (1) are—
	(a) section 3(2) and (3), and
	(b) section 3(7)(a) and Schedule 1 (in so far as they relate to the starting rate).
	(3) The conditions referred to in subsection (1) are that—
	(a) the Chancellor of the Exchequer shall have laid before the House of Commons a statement setting out the measures taken, or intended to be taken, to mitigate the effect of the amendments made by the provisions of this Act specified in subsection (4), when taken together, on those for whom such effect is a net increase in income tax payable, and
	(b) the House of Commons shall by resolution have approved such statement.
	(4) The provisions referred to in subsection (3) are—
	(a) sections 1, 3(2) and 3(3),
	(b) section 3(7)(a) and Schedule 1 (in so far as they relate to the starting rate), and
	(c) any other provision of this Act the effect of which is to change the bands of income on which income tax is charged.'.— [Mr. Hammond.]
	 Brought up, and read the First time.
	 Question put, That the clause be read a Second time:—
	 The House proceeded to a Division.

Amendment proposed: No. 6, in page 2, line 27, at end insert—
	'(8) The Chancellor of the Exchequer shall, within six months of the coming into force of this section, lay before the House of Commons a report containing an assessment of the combined impact of—
	(a) the increase in personal allowances, and
	(b) the abolition of the starting rate of income tax,
	on individuals with a gross income under £13,000 per annum.'.— [Mr. Jeremy Browne.]
	 Question put, That the amendment be made:—
	 The House divided: Ayes 161, Noes 307.

Question accordingly negatived.
	 Amendment made: No. 5, in page 101, leave out lines 19 and 20 and insert—
	'(5) Insert at the end—'.— [Jane Kennedy.]

Mr. Deputy Speaker: With this it will be convenient to discuss the following:
	New clause 5— Coming into force of Part 7
	'The provisions contained in Part 7 of this Act shall not come into force until—
	(a) the Treasury has prepared and laid before the House of Commons a report setting out the safeguards available to taxpayers and third parties in respect of HMRC's powers contained in Part 7 of this Act; and
	(b) the House of Commons has by resolution approved the report.'.
	New clause 19— Taxpayers' charter
	'(1) The provisions of Part 7 of this Act shall not come into force until the condition set out in subsection (2) has been satisfied.
	(2) The condition referred to in subsection (1) is that the Treasury has, by regulations made by statutory instrument, provided for the introduction, by no later than the passing of the Finance Act 2009, of a Taxpayers' Charter.
	(3) Regulations under subsection (2) must—
	(a) specify the statutory rights of the taxpayer, including providing for a right to appeal against an action or decision of HMRC, and
	(b) specify the statutory duties of the taxpayer, including—
	(i) notice periods to which the taxpayer must adhere,
	(ii) documents to which the taxpayer must allow access, and
	(iii) penalties which may be levied on the taxpayer for failure to comply.
	(4) Regulations under subsection (2) may not be made unless a draft of the instrument containing them has been laid before and approved by the House of Commons.'.
	No. 8, in clause 112, page 72, line 36, at end insert—
	'(10) This section shall not come into force until—
	(a) the Treasury has laid before the House of Commons a review of the ability of HMRC to secure electronic documentation provided by a person to HMRC for the purposes of checking the tax position of that person, and
	(b) the House of Commons has by resolution approved that review.'.
	Government amendments Nos. 24 to 28
	No. 36, in schedule 36, page 382, line 37, leave out 'solely' and insert 'in whole or in part'.
	No. 37, page 383, line 23, leave out 'solely' and insert 'in whole or in part'.
	No. 38, page 383, leave out line 29 and insert—
	'(b) if sub-paragraph 2(b) applies or the occupier does not agree a time and sub-paragraph (2) is satisfied, at any reasonable time.'.
	No. 39, page 383, line 31, leave out '7' and insert '14'.
	No. 34, page 388, leave out lines 22 to 24.
	No. 35, page 388, leave out lines 32 to 34.
	No. 4, in schedule 39, page 413, line 21, leave out paragraph 12.

Jane Kennedy: First, I shall discuss new clauses 5 and 19. New clause 5 is technically deficient. It is not clear how it is intended to work in conjunction with the provisions that are to be brought in by separate order. The intention is to delay the whole of part 7 until the report has been written and endorsed by Parliament, but that does not sit easily across these measures; the same applies to new clause 19.
	I want to say a little about part 7, which contains a number of administrative provisions, the majority of which come from the work of the review of powers, deterrents and safeguards. Other measures in part 7 include clauses relating to appeals, excise matters, funding bonds and measures under the avoidance disclosure rules and others. Those clauses are vital if the HMRC is to deliver the benefits set out in the O'Donnell review, including the closure of the tax gap and the modernisation of existing legislation.
	The importance of adequate safeguards has been recognised by the Government and the HMRC and the valuable views of representative bodies have been taken on board. In Committee, we spent seven hours on schedule 36 alone. I am not complaining about that; it is right that such an amount of time should have been spent on such important legislation. In addition to those safeguards in the primary legislation, further protection will be provided by regulations and guidance. Broadly, that is the main area of disagreement.
	It would be helpful to consider what the legislation actually includes. For compliance checks, schedule 36 alone includes 37 separate and identifiable safeguards. The levels and reductions for penalties for incorrect returns are now set in statute, rather than being in HMRC guidance to be left to the discretion of officers. On resolving disputes, clause 122 will introduce an optional statutory review of HMRC decisions. The amendment would delay that.
	Throughout our debates, the Opposition have repeatedly stated that all safeguards should be in primary legislation. I do not accept that, and I do not believe that the hon. Member for South-West Hertfordshire (Mr. Gauke) would if he were in my position; I hope that he will not be any time soon. Legislation cannot cover every conceivable scenario. Other forms of safeguard can be both flexible and a protection for the taxpayer. In deciding whether the HMRC is acting reasonably in any particular case, the courts will take account of its published guidance.
	As with last year's penalties clauses, there will be full and open consultation on the guidance. That approach was applauded last year. Work on producing guidance on compliance checks in formal disputes resolution, penalties, debt and unpacking containers will be completed well in advance of the legislation's coming into effect. Although it is true that we have not always been persuaded that further safeguards are necessary, additional safeguards were introduced in consultation before the Bill was introduced and in the course of our proceedings. The HMRC has been prepared to forgo certain benefits of alignment when respondents to consultation made a strong case for the retention of safeguards. For instance, we have retained the inquiry window for direct tax self-assessment cases and the evidence of facts rule for VAT.
	Following consultation, we also agreed that a penalty on a third party should apply only when that third party deliberately falsified or withheld information from a taxpayer. We removed a proposed penalty for failure to allow entry to premises unless there had been an independent external authorisation. During the parliamentary process itself, the Government have tabled further amendments ensuring that the power of entry and inspection does not extend to any part of premises used solely as a dwelling. Other than in cases involving the taxable supply of goods, we restricted the power to inspect business premises to those used by the person whose liability is being checked. I recognise the concerns that have been expressed about ensuring adequate safeguards, but such safeguards must provide real and effective protection for taxpayers, rather than merely create bureaucracy and delay. The balance is right in part 7.
	As I said, new clause 5 seeks to delay that implementation of part 7 until further reports. What could such reports add to the already extensive consultations and detailed debates in the House? No doubt, the hon. Member for South-West Hertfordshire will make the case in a moment. New clause 19 seeks to delay the implementation of part 7 until regulations containing a taxpayers charter have been approved by the House of Commons. Acceptance of that new clause would result in the additional safeguards in part 7 being delayed for another year—a somewhat perverse outcome, given the importance attached to safeguards.
	As the House will know, we are considering the introduction of a charter, which should bring many positive benefits, especially in improving the relationship between the HMRC, taxpayers and other customers. I want to put on record my gratitude to the representative bodies for the interest that they have shown in the subject, and particularly to the Chartered Institute of Taxation for the paper that it published in March.
	The consultation published on 19 June makes things clear. The terms of a charter should not be set out in legislation. That is not to devalue the charter, which is an important standard. Many taxpayers' rights are set out in tax legislation—for instance, the right to appeal against certain HMRC decisions. Others, however, are provided through non-statutory routes such as codes of practice and departmental practice. In addition, an array of non-tax legislation—the Human Rights Act 1998, data protection legislation, the Freedom of Information Act 2000 and the like—also governs the HMRC's relationship with taxpayers and claimants. A charter is intended to support that. The wording of an accessible and useful charter is not intended to be like that of legislation; it is meant to be a guide to the law. The use of statutory wording in a charter would compromise the intention to create a simple statement of the basic rights of taxpayers and other customers in their relationship with the HMRC.
	This is a large group of amendments, and I shall try to address quickly each of them in turn. Clause 112 forms part of a package of measures allowing the HMRC to check that taxpayers have met their obligation to pay, return and claim the correct amounts of tax. That package includes the power to require the production of documents and the power to inspect them. In essence, the clause reproduces the equivalent provisions from the former Inland Revenue and Customs and Excise. The clause consolidates the provisions that ensure that documents include electronic versions and allow HMRC officers access to computers holding information required for a tax check. The new provision also aligns and decriminalises the penalties that apply when a person obstructs an inspection of computer records or fails to provide reasonable assistance.
	Amendment No. 8 would not have any impact on the HMRC's ability to carry out checks on electronically held records. The existing provisions would continue in force until superseded by clause 112, but the amendment would leave in place the current unsatisfactory situation whereby a person could face a criminal charge for obstructing the exercise of the power or for failing to offer reasonable assistance under one provision, and a financial penalty under the other provision. I believe that it is better to align those now.
	The reports by Kieron Poynter and the Independent Police Complaints Commission following the loss of discs containing child benefit data have recently been published. Both reports make it clear that the HMRC did not give data security the priority and attention that it should have done. Those are strong criticisms that the department has taken on board. I am grateful to the IPCC and to Kieron Poynter for their thorough reports, and I fully accept all their recommendations. HMRC has already made progress on 39 of the 45 recommendations and has implemented 13 of them. The powers in clause 112 already exist and would continue to operate regardless of amendment No. 8. It would be unnecessary for another report to be undertaken by HM Treasury. What is needed is work to ensure that data security is a top priority, and the Poynter review acknowledges that that is already well under way. The amendment is therefore superfluous.
	Amendments Nos. 34 and 35 concern provisions for taxpayers and third parties to appeal against notices to see statutory records. The Bill already introduces a right of appeal against requests for supplementary information. That is new, as current legislation provides only a right of appeal against information requests made as part of a self-assessment inquiry. However, since taxpayers are required by law to keep certain records, it should not be onerous for them to provide them. A right of appeal would not be appropriate or effective. It is difficult to see what grounds for appeal would succeed. What is more, sadly, evidence from income tax self-assessment suggests that where such a right of appeal exists some non-compliant taxpayers exploit it by routinely appealing against all notices for even the most basic information so as to delay the proceedings.
	As I said, safeguards need to be effective. The power to require statutory records must be exercised for the purpose of checking a tax position and must be exercised reasonably. Those are better safeguards. I can understand the concerns, but the amendments would not achieve the protection hoped for and could do the opposite. I hope that they are not pressed to a Division. As I have said repeatedly in considering the HMRC's powers, I will keep this matter under close review to ensure that the new powers and the proposals in the Bill work in the way that is intended.
	Amendments Nos. 36 and 37 seek to prevent the HMRC from ever visiting or inspecting records at a taxpayer's home. The legislation currently prevents officers from visiting premises used solely as a home. The motives behind the amendments are wholly understandable but they fail to recognise the complexity of people's affairs in the 21st century. The amendments would prevent visits to, for example—I am not singling these groups out for any particular reason—dentists, doctors, hairdressers or carpenters. Hairdressers seem to feature in our discussions. I could go on, but I will not. I am talking about those who, for example, use one room in their house as a surgery, salon or workshop. The amendments could also affect the ability to inspect pubs, corner shops and other premises where the taxpayer lives on those premises. They would affect unacceptably the HMRC's ability to carry out its duty of checking that the right tax has been paid at the right time by all businesses.
	The problem of distinguishing between business premises and homes is not unique. It is faced by the rating authorities—we discussed whether their definitions could be used—by planning offices and by local authorities. In each situation, the detail of what is considered to be business premises is set out in guidance. HMRC has agreed that guidance is needed to set out the circumstances in which it is acceptable to visit a home used for business purposes. Assurances have already been given in Committee that that guidance will be written in consultation with representative bodies. Assurances have also been given that the homes of home workers and those occasionally working from home will not be treated as business premises.
	Amendment No. 38 appears to be attempting to restrict the times when the HMRC can specify the time and place of a visit to situations where the taxpayer does not agree a time and place. It is not clear that the amendment would work. If it did, it would apparently prevent HMRC officers from making a visit if the occupier agreed to a visit two years' hence. I will wait to hear about the detail of that proposal. Amendment No. 39 is a replica of an amendment that we discussed in Committee.
	Amendment No. 4 seeks to retain the general time limit for taxpayers' income tax claims at five years and 10 months. However, that would make it out of step with assessment time limits and with other claim time limits, which we are aligning at four years across taxes. We made progress on time limits in Committee, so I will not labour the points again. The new framework continues to deliver parity between taxpayers and the HMRC. Where tax has been underpaid as a result of a mistake, the HMRC will be able to assess that only within the new four-year period. Similarly, a taxpayer will be able to make a claim within four years. None the less, HMRC will still accept later claims where the taxpayer has a reasonable excuse, including where an error on the HMRC's part has led to the claim being made outside the time allowed or where a taxpayer has given clear notice of his or her intention to claim before the time limit expires.
	The HMRC and I recognise that pensioners and those on low incomes have very particular needs. The HMRC is working to understand them and to find ways to overcome barriers and raise awareness about the need for formal claims. The HMRC will work with taxpayer representatives, including the Low Incomes Tax Reform Group, to identify which groups of people are likely to be able to make claims, and the HMRC's publicity will target those groups to inform them of their rights to make claims and of the time limits. I have said it before in Committee and say it again today: I will keep the effectiveness of the HMRC's publicity and the planned PAYE system improvements under review to ensure that people are prepared for the new time limits from 1 April 2010.
	I will pause at this point, as before I turn to some of the other issues, it might be helpful to hear what the hon. Member for South-West Hertfordshire has to say.

David Gauke: It is a pleasure to return to the issue of powers. As the Financial Secretary said, we debated the matter at some length in Committee. The time we spent was valuable, although I had not realised that we spent seven hours on schedule 36 alone. I suspect that I may have been responsible for quite a chunk of that time, but I do not think that I will be addressing the House at anything like that length this evening.
	The debate that we had in Committee was important. The Government's consultation and the proposals in the Bill provoked a considerable response, and there was a great deal of public interest. The professional bodies looked very closely at what the Minister said, in particular, to seek reassurance and a further understanding of what the measures involved. The debate was therefore a valuable and useful part of the Bill's passage; in many respects, the process worked as it should have done. I compliment the Financial Secretary on the way in which she has addressed this matter, attempting to deal with the issues in a constructive manner.
	There are times in the course of all debates, including on this Finance Bill, which is no exception, when the Opposition wish to highlight—"take pleasure in" would be the wrong way of putting it—the fact that a Government have moved their position. We make accusations of U-turns, fiascos and humiliations—and rightly so with regard to some of the matters that we have debated today. However, on the subject of our discussion, the Government have moved for the best of reasons. There has been an intention to listen to the concerns of professional bodies and an attempt to allay them. We wish that the Government had gone further in some instances, which we shall discuss this evening, but I want to put it on record that the Government's approach has been sensible. Equally, I hope that the Financial Secretary agrees that our approach has been one of constructive opposition in trying to scrutinise the Government's actions and highlighting where we think they are wrong, but trying together to move the law in the right direction.
	The principal concern that the professional bodies raised is, at heart, simple. By and large, there is no objection to greater harmonisation of powers for different types of taxes. There are sometimes one-size-fits-all problems, but by and large, some harmonisation is recognised as beneficial. However, there is concern about balance regarding HMRC's powers and deterrents. They are mostly increasing and are perhaps advancing faster than the safeguards. What HMRC requires to collect tax efficiently and enforce tax law, and the safeguards for protecting the taxpayer, are out of sync to some extent. That point is at the heart of the concern expressed by the professional bodies, and we raised it on numerous occasions in Committee.
	Movement has occurred and the Government have taken a constructive approach. There has been movement on notice before inspections of businesses and on inspections of third party premises. The Financial Secretary made some helpful comments and provided clarification on issues such as set-off involving tax credits. An Opposition amendment was even accepted; it dealt with the length of time after which HMRC may serve an information notice on a deceased person's tax position. We are grateful to the Financial Secretary for agreeing to the amendment on the basis that it was common sense—as she said, it was a good amendment. That is not to say that there were not many other good amendments, which were not accepted, but we take what we can.
	The Government have also promised to keep matters under review—the provisions on powers, and especially the culture change in HMRC with regard to customer service and improving the taxpayer's experience. Other specific issues to be kept under review include professional privilege, the meaning of "reasonable excuse" in the context of penalties and, as the Financial Secretary mentioned this evening, publicity for tax reclaims. That is important.
	However, we have also heard a great deal—we heard it again tonight—about the way in which many issues that we have raised will be addressed in guidance. The Financial Secretary said that we argued that everything needs to be in primary legislation. Yes, we argued that more than we currently have should be in primary legislation. Oppositions tend to argue that regulations should be made by the affirmative rather than the negative procedure, although there were circumstances in which we did not adopt that position.
	There are times when it is appropriate for HMRC to use guidance because it gives greater flexibility, which can be necessary. Guidance will be used for a list of matters. However, the thinking behind new clause 5 is that we could not examine the guidance or make an informed decision about whether the balance that I considered a moment or two ago was being struck. We have to take it on trust that, when the guidance is produced, following consultation with professional bodies and so on, that balance has been achieved.
	Let me briefly consider some of the issues with which guidance will deal—the Financial Secretary also mentioned some. Sometimes there will be clear-cut cases of what constitutes a business premises and what constitutes a private home, but at other times, they will be borderline. Guidance will provide the answer to that and to what constitutes a business activity. It will also cover the information that should be provided to the taxpayer when HMRC visits a premises. There will be a code for unannounced visits and greater detail about what constitutes statutory records. There is also the tribunal system. The Financial Secretary said that the Ministry of Justice was examining that matter and that a Finance Bill could not tackle it. We considered reporting scheme reference numbers and HMRC's disclosure rules. There is also HMRC's policy on set-off.
	One could take each item and present an argument about whether it should be dealt with in primary legislation, regulation or guidance. It is not my purpose to pursue those arguments, but to emphasise that, even if we accept the Government's case that those matters should be tackled through guidance, Parliament is considering the subject without full knowledge of that guidance. The Government have worked constructively, but to some extent they have done that because of our parliamentary proceedings, which focus the mind of Ministers, their advisers, professional groups, the Opposition and Parliament as a whole. Parliamentary involvement means that we do not simply drift into accepting a set of provisions that do not entirely satisfy the wider business community, taxpayers and so on.
	I said at the outset that the process of considering the Finance Bill had been valuable and useful for the provisions on HMRC powers. Ministers have been forced to examine those powers closely and defend them. Doubtless, the Financial Secretary has questioned officials and forced them to justify the provisions. That is healthy. New clause 5 would grant an opportunity—perhaps not on the same scale as the Finance Bill; we had a good four or five sessions on the powers—for Parliament to revisit part 7 and all the various disparate issues that I have mentioned before it comes into force.
	At that point, the Treasury would have to prepare and lay before the House of Commons a report setting out the safeguards available to the taxpayer and third parties in respect of HMRC powers in part 7. The Financial Secretary will then have to sit down with officials and see whether the balance has been achieved and whether the guidance provides the proper protection, knowing that she will have to appear before members of a committee who will not only question and scrutinise, but receive support and guidance from professional bodies. Again, I appreciate that that would be hard work for busy Ministers and also for Opposition spokesmen, but it would be a useful exercise ensuring that when we come to the end of the process, the warm words, and the undertakings that we have heard from the Financial Secretary, which I do not doubt for a moment, are delivered in practice. That is the thinking behind new clause 5. We find that a persuasive argument, and I should like to give notice that we intend to press new clause 5 to a vote.
	Briefly, new clause 19 deals with the taxpayers' charter, which is advocated by the hon. Member for Taunton (Mr. Browne), who will no doubt speak on the matter. I do not wish to spend a great deal of time on it, but it would be fair to say that the thinking behind new clause 19 is similar to the thinking behind new clause 5, so obviously we have a great of sympathy for it.
	Let me turn to our amendments, to which the Minister referred. Amendments Nos. 34 and 35 relate to the right to appeal against taxpayer notices. Paragraph 29 of schedule 36 gives taxpayers and third parties a right of appeal to the first-tier tribunal against an information notice or third party notice. However, there is no right of appeal if the notice relates to a taxpayer's statutory records. The Financial Secretary made the point that given that there are circumstances in which businesses are required to keep records, they should therefore have to disclose them. That is a fair point, but our concern—the Institute of Chartered Accountants has highlighted this, too—is that there is sometimes a grey area between business records and personal records.
	In our debate in the Public Bill Committee, the Financial Secretary referred to a hairdresser's appointment diary—as she said, many of her analogies and examples involved hairdressers—and that was helpful. A hairdresser's appointment diary is clearly a business record. That is not in dispute. However, many people will keep a diary that contains some business-related entries, but a majority of personal entries. They may take a different view from an HMRC official on that personal diary, which by its nature will contain personal information that an individual would, for whatever reason, not want to fall into the hands of a third party.
	What is that taxpayer to do? They have no ability under the Bill as drafted to appeal to a third party when there is a disagreement. The purpose behind amendments Nos. 34 and 35 is to address that issue. One way of dealing with the problem that would address my concerns, and perhaps those of the Financial Secretary, too, would be to give a right of appeal purely on the basis of whether the document in question is a statutory record. The Financial Secretary said that there was a danger of delays and that people might use an appeal mechanism to delay unduly the progress of an HMRC inquiry. However, we should remember that the tribunal will have the power to impose costs in the event of determining that any such delay is vexatious. I therefore question whether the Financial Secretary's argument is necessarily that persuasive.
	Amendments Nos. 36 and 37 relate to paragraph 10 of schedule 36, which deals with the power to inspect business premises. The issue here is whether the premises are used solely as a dwelling, in which case the powers are not applicable, or whether, as we argued in Committee, the provisions could be broadened to include premises that are used in whole or in part as a dwelling. In Committee, the hon. Member for Dundee, East (Stewart Hosie)—he is here now, so perhaps he will speak on this point—provided the useful example of a musician taking a booking. When a musician takes a booking, they will not have one room in the premises that is used for business purposes, to which HMRC could have access, thus leaving the rest of the house—the private dwelling—untouched. Rather, it is likely that a phone call would be received in a living room, the study or a bedroom, which would therefore be being used, at least in part, for business purposes.
	There is clearly some sensitivity to the issue, which the Government recognise, because they already accept that paragraph 10 of schedule 36 should not apply to premises that are used solely as a dwelling. There is clearly agreement on that. However, the exemption in paragraph 10 would appear to be largely ineffective for those people—I suspect that this is a large number of people, not just musicians—who do some work from home, such as making phone calls or working on a computer. With regard to those circumstances, that sensitivity, which the Government accept in paragraph 10, does not appear to have been addressed. I would therefore be grateful if the Financial Secretary addressed that concern. If there is some sensitivity towards dwellings, what is the reason for it; and, given that explanation, how does she justify the narrow exemption in paragraph 10?
	Let me turn to amendments Nos. 38 and 39. As the Bill is drafted, where HMRC wishes to inspect a premises, it must either agree a time with the occupier, give at least seven days' notice—I acknowledge the fact that the Government moved from 24 hours' notice, which we welcome—or be authorised by an authorised officer. That third leg is important and relates to combating fraud, although that is not the concern in this context. Amendment No. 38 would mean that the notice period would be triggered only if the officer had sought to reach an agreement with the taxpayer. The concern, which has also been raised by the Institute of Chartered Accountants, is that although there is provision that there should be agreement—the Financial Secretary said in the Public Bill Committee that she anticipates that, as a rule, HMRC will seek to reach an agreement with the taxpayer—that could, strictly speaking, simply be ignored by HMRC. HMRC could immediately start counting down the clock towards the seven days' notice without having first attempted to reach an agreement. Amendment No. 38 attempts to address that problem.
	I have some sympathy with the Minister's view that the amendment's drafting is not as clear as it might be, but its intention is to ensure that the first step is the reaching of an agreement. If that cannot be achieved, the clock will start ticking towards seven days or, as we argue in amendment No. 39, towards 14 days. In Committee, we debated how many days it should be, but there was an element of "how long is a piece of string?" to our discussions.
	The reason behind our proposing 14 days is that people often go on holiday for up to a fortnight, and they should not have to come back to find HMRC on their doorstep. Fourteen days is therefore more reasonable. We are not talking about combating fraud or about the equivalent of a dawn raid. I recognise that there are times when HMRC needs the power to move quickly and to surprise a taxpayer whom it suspects of fraud, but we are not talking about those circumstances here. I therefore believe that 14 days—as opposed to seven days—is entirely reasonable.
	Before I deal with amendment No. 4, I should like to say a few words about Government new clause 16 and its consequential amendments. We do not have any particular problems with the new clause, although we wonder why we are getting a new clause at this stage. To be fair, however, the explanatory notes state that this is as a consequence of the Commissioners of Revenue and Customs  v. Midlands Co-operative Society case, which was determined in April. The case related to the right to make a claim for overpaid VAT being capable of being transferred from one person to another, and to how set-off could be avoided in such circumstances. I would be grateful if the Minister told us what financial risk might be at stake in those circumstances, although she might not have the figures to hand. I do not know what scale is applied in claims for overpaid VAT, or other taxes, where an amount is set off, but presumably that is the amount that could be at risk. If she enlightened the House on that point, I would be grateful.
	Theoretically, the transferee of a VAT claim could be entirely innocent. In the circumstances envisaged in new clause 16, the set-off could be made against the transferee as though it were against the transferor. However, what remedy would be available to a transferee who had acquired a VAT claim in all innocence? Those circumstances might be unlikely, but I would like to know whether a motive test, which often is incorporated into measures to tackle avoidance, was considered.
	I must reiterate some of the concerns about the set-off provisions. We have expressed our concern that set-off might occur when it is not in the best interests of taxpayers, and that perhaps it should be achieved only with the agreement of taxpayers. In particular, we have asked what would happen in an ongoing dispute between HMRC and a taxpayer and HMRC sought to make use of its powers on set-off. There are further issues relating to set-off, and although we have no specific objections to the new clause we have one or two queries.
	Amendment No. 4 deals with reclaiming overpaid tax, which we debated in Committee—albeit fairly briefly, given the nature of the issue. The Low Income Tax Reform Group—LITRG—has been active in this regard, and I was pleased to hear the Minister say that she is working with the group to address the matter. Paragraph 12 of schedule 39 will reduce the time limit for reclaiming overpaid tax from five years and 10 months to four years. Many people on low incomes, especially pensioners, overpay tax and are not aware of their right to reclaim it. LITRG has highlighted three situations in which this tends to happen. The first is when tax is deducted at source from bank or building society interest at a higher rate than that at which the depositor is liable. The second is when older people are not given the right age-related allowances—we have heard plenty of anecdotal evidence about that—and the third involves incorrect PAYE codes being given to people with multiple income sources, such as more than one pension.
	LITRG has criticised HMRC's efforts to highlight the issue of overpaid tax. It has been particularly critical of the fact that the number of leaflets and other paper products produced by HMRC has diminished over the years, and of the fact that there has never been a take-up campaign for the blind person's allowance. Many people assume that one has to be blind to claim it, but that is not the case. The group also says that these matters could be resolved if HMRC carried out regular matching of PAYE records and established an annual routine of contacting all those whom it had identified as due for a repayment.
	This is an important issue. The organisation Tax Help for Older People has conducted a survey of recent claims for back tax. It found that 44 per cent. of low-income pensioners who had had tax repayments had been entitled for six years or more. The Bill states that the rights of those low-income pensioners would be reduced, and that they would be able to claim only for four years.
	In Committee, I referred to the pensioner tax-back project, which, in 2005, repaid 50,000 pensioners some £20 million. It is interesting to note the comment by Robin Williamson of LITRG. In an e-mail to me, he described that as being merely the "tip of an iceberg". In Committee, the Government's position was that there would be a one-way flow if we changed the arrangement, and that the period allowed for reclaiming tax would be greater than the period available to HMRC for assessment. It was stated that there was a need for symmetry. Previously, there was symmetry in relation to the period of five years and 10 months, or of six years, and that has been reduced.
	Taxpayers cannot be expected to possess the same knowledge of their tax position as a trained Revenue officer. There is an imbalance between the knowledge and expertise of HMRC and some taxpayers, particularly the low paid and the elderly. That problem might persist and even intensify, given that the 10p savings rate will continue although the 10p income tax rate has been abolished. We will therefore press amendment No. 4 to a Division.
	We have had constructive debates, but the point remains that the balance may not be quite right. We seek further reassurance from the Minister—we have already received much reassurance from her—particularly on the specific issue of tax reclaims for the low paid. We also seek to provide Parliament with an opportunity to debate these issues once it has had the benefit of seeing the guidance and of assessing how the promised change in HMRC culture has worked. If we do that, we will have a regime that will stand the test of time and this fundamental reform of HMRC's powers will be a success.

Jeremy Browne: In the previous debate I was inaccurately accused of taking insufficient interest in the details of the Bill. Here I am now, but my detractors have left to discuss other matters elsewhere, which I regret. Although this does not at first sight appear to be a box office string of amendments, it is quite significant as it deals with the balance between the powers of the state and the liberties of the individual citizen.
	PricewaterhouseCoopers, which obviously follows these matters closely, has described the proposals that we seek to amend this evening as
	"the most fundamental changes to HMRC's ability to inquire into direct tax returns since 1976".
	A series of different Acts, including the Taxes Management Act 1970—the year in which I was born—and the Finance Act 1998 has been scrapped and a new framework for governing the practices of Her Majesty's Revenue and Customs, augmented by further published guidance, has been put in its place.
	Members of all parties would recognise that HMRC has an important job to perform. It has a duty to collect on behalf of the Government the taxes that this Parliament has decided to levy on the people of this country. We would not, of course, enjoy the public services and other aspects of public expenditure if that task were not performed collectively on behalf of us all, so I am not in the business of running down HMRC. It has an important job to do; nobody likes paying taxes, but I observe that nobody likes the withdrawal of the public spending consequences either. We thus owe a debt to HMRC for undertaking what is not always the most popular work on our behalf.
	There will be occasions when HMRC detects behaviour that is either consciously fraudulent or, in some cases, not fraudulent but where the individual is not paying a level of tax that is deemed, on further inspection, to be appropriate and necessary. Up to a point, HMRC needs powers to probe the private affairs of individual citizens, but legitimate concerns have been expressed by many representative bodies that those powers have become excessive. HMRC's website claims that
	"the Review of Powers is committed to consulting widely at each stage in the development of policy and legislation",
	but many feel that the Government have ignored wider stakeholder reservations about the Bill.
	I made the point in Committee that the consultation period ended on 6 March, but the details of the proposed changes were announced in the Budget of 12 March. Although I have never worked in the Treasury, I suspect that many of these matters were decided not in the final few days, but many weeks earlier. A number of professional bodies share my suspicion that many of their representations were overtaken by the considerations and deliberations of the Treasury and that the consultation process was not as comprehensive or as "listening" as it might have been.
	The Liberal Democrats have tabled new clause 19 and amendment No. 8, which I propose to discuss in reverse order. I said during the debate on the previous group of amendments that when the history of this Prime Minister's time in office comes to be written, the feature of his premiership that will attract the greatest degree of criticism will probably be the doubling of the 10p tax rate and the wrath that it incurred among the electorate. Another contender for the moment that inflicted the greatest damage to the Prime Minister's reputation, however, is an action that was not specifically within his control but that summed up for many people the accident-prone nature of his premiership—the loss of data on 25 million of our citizens when two tax discs went missing.
	It is important that we recognise the seriousness with which our fellow citizens take the need to protect their individual data and private information. As with medical records—and, of course, the Government are enthusiastic about introducing ID cards—more and more of our individual data, which can be sensitive and private, is being stored electronically and centrally. If we think back to 10 or 20 years ago, it would have been difficult to distribute personal data about 25 million people—even if one sought to do so—without lorry loads of couriers to take the information to the required destination. Nowadays, all that can be sent on CDs or at the press of a computer button. Understandably, people have come to rely on the efficiency of data transfer, which is also hugely important in any modern economy, but, at the same time, people are concerned about how good the safeguards are to protect their confidential affairs.
	Amendment No. 8 would prevent clause 112 from coming into force until
	"a review of the ability of HMRC to secure electronic documentation"
	had been undertaken and approved by the House. I appreciate that the Government are already trying to make progress in that regard, that the Chancellor has come before the House to make statements and that other Treasury Ministers have spoken, so all parties recognise that the subject is serious. The amendment would, however, give a firmer and more formal standing to that process and allow the elected Chamber of the UK to debate, discuss and, ultimately, approve the actions taken by the Government to make improvements.
	New clause 19 is probably more significant, as it is designed to put a charter into law. Of course, charters were very fashionable in the 1990s; I remember them covering all sorts of areas, some more important than others. This provision is a bit of a return to those days, when the Government were crumbling and defeat looked inevitable. The charter under discussion seeks to ensure that the rights of the individual citizen are protected when they are dealing with HMRC.

Jeremy Browne: I concede that, and the Government have on occasions been slightly unfairly maligned. A reasonable person trying to be as impartial as possible would say that part of the blame for some of the problems that HMRC has had could reasonably be attached to the Government because they sought to reorder and restructure the organisation. If one undertakes an organisational restructuring, one must live with the consequences of problems or inefficiencies that arise partly as a result of that restructuring.
	That said, were the Government of this country run by another political party, would such problems disappear overnight? No, it is reasonable to say that they would not. Such problems will inevitably arise in private and public sector organisations, because that is the nature of human error and of the new electronic age in which we live. The only thing we can do is to ensure that the safeguards are constantly reviewed and improved, and I appreciate that the Government are trying to do that—it would be odd if they were not. We encourage the Government to do even better in that regard.
	On the balance between the powers of the Revenue and the individual taxpayer, it would be helpful to clarify and formalise the specific powers of HMRC, which new clause 19 seeks to do. It is not a one-way street—it would be helpful for employees of that organisation to know in greater detail and with greater clarity what they are allowed to do. I and the hon. Members for South-West Hertfordshire and for Dundee, East raised hypothetical examples in Committee, and there are and always will be grey areas—probably even more than in the past, because people's tendency to work from home, internet cafés or whatever will mean less distinction between the place of work and place of residence than even five years ago. A proper charter that explains what HMRC is able to do would therefore be helpful.
	Basic rights of appeal for individual citizens against the actions or decisions of HMRC would also be helpful, in which respect the charter would more closely resemble the citizens charters of the 1990s. Many people who understand that HMRC has a job to do, and that a tax inspection regime must be in place, nevertheless feel that they are interfacing with an organisation that is sometimes heavy-handed and unsympathetic to what they regard as legitimate reasons that their tax was not paid precisely as HMRC had decreed. Those people feel that they have little right of appeal or recourse to rectify that perceived wrong. New clause 19 would therefore balance more formally the powers of the state—which we recognise must exist in the field that we are discussing—with the liberties of the individual citizen. It should not be assumed that HMRC's powers are always superior to those of the individual citizen. Taxpayers have rights just as tax collectors do.
	We look forward to the Financial Secretary's closing remarks, but we wish to press new clause 19 to a vote at the appropriate moment.

Brooks Newmark: I had not intended to contribute to the debate, but I was so moved by the words of my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) that I am compelled to speak, albeit briefly, on amendment No. 4. I am in constant touch with members of the Braintree Pensioners Action Group, and I feel that pensioners, people on low incomes and people with disabilities might still be hurt by the apparent direction of the Government.
	We have heard that the entitlement period for those trying to reclaim overpaid tax will be reduced from five years 10 months to four years. We know of the efficiency, rigour and zeal with which HMRC seems to go about collecting tax. Unfortunately, on the other side of the equation, the elderly, those on low incomes, and those with disabilities are perhaps not as efficient in understanding how, when and the means by which they can reclaim their overpaid tax. As we have heard from my hon. Friend, they might not even be aware that they have overpaid.
	In that spirit, I have three questions for the Minister. First, what is motivating the Government to reduce the period that some of the most vulnerable people in our society have to reclaim overpaid tax? Secondly, what discussions has the Financial Secretary had with the Low Incomes Tax Reform Group on the issue? I am sure that she has had many such discussions, because that group has clear concerns about the direction of the Government and HMRC. Thirdly, having listened to pensioners, the elderly, those on low incomes and particularly representative groups such as the Low Incomes Tax Reform Group, what protections do the Government seek to put in place for those who might be hurt by that general direction?

Jane Kennedy: I shall deal with the Government's new clauses on set-off provisions before returning to the points made by the hon. Member for Dundee, East (Stewart Hosie) and others.
	As the House was told by the hon. Member for South-West Hertfordshire (Mr. Gauke) and as the explanatory note makes clear, new clause 16 is required as a result of a recent judgment by the Court of Appeal to protect the Exchequer from potential avoidance opportunities, and to ensure that tax is collected as Parliament intended. The hon. Gentleman asked me about the cost to the Exchequer. I approach the answer with some caution. It is extremely difficult to say how much would be lost if the Exchequer were to lose its powers and duties to set off outstanding liabilities against claims for overpaid tax, but it is clear from the value of claims currently lodged with HMRC that the revenue potentially at risk runs into hundreds of millions of pounds—less than £500 million, but nevertheless representing a considerable range. I do not wish to be drawn into too much detail, but there is a significant risk.
	Until the Court of Appeal judgment, HMRC had taken the view that only the person who overpaid the tax was entitled to make a claim for repayment. When a person makes a claim for over-declared VAT, HMRC is required to set off against it any outstanding liabilities of the claimant. For example, when a taxpayer submits a claim for £10,000 but has a VAT debt on file of £3,000, his eventual refund will be £7,000.
	The judgment of the Court of Appeal in the case mentioned by the hon. Gentleman, Commissioners for Revenue and Customs  v. Midlands Co-operative Society, makes clear that the right to make a claim can be transferred by the person who overpaid the tax, namely—this is where it becomes horribly legally complicated—the original creditor, to another person, the current creditor, who then becomes entitled to make the claim to HMRC for repayment of the tax. The potential loss of tax arises because there is no provision under current law for HMRC to offset the liabilities of the original creditor when the claim for the overpaid tax is made by someone else. As a consequence, taxpayers can, through assignment of the right to make a claim, avoid the set-off procedure.
	New Clause 16 seeks to address that avoidance opportunity by putting the current creditor in the shoes of the original creditor for the purposes of the setting off of liabilities. That is about as far as I, a non-legal person, can follow the details, but it is important to ensure that when a person who has overpaid his tax liability—the original creditor—transfers the right to claim that overpaid tax to another person—the current creditor—the current creditor will not receive from HMRC any more than the original creditor would have received had he made the claim himself.
	Although the Midlands judgment was a VAT case, its application is not limited to VAT. As the current procedure for claiming overpaid VAT is replicated for all the indirect taxes administered by HMRC, the potential for avoidance and loss to the Exchequer exists for them all. HMRC believes that it may also exist in relation to claims for error or mistake relief in direct tax. I stress that the new clause does not empower HMRC to make the current creditor liable for the debts of the original creditor. It simply ensures that the current creditor cannot receive any more tax from HMRC than the original creditor would have been entitled to.
	It is not my intention that HMRC should rely solely on the new clause to recover the original creditor's liabilities. When the right to claim a repayment from HMRC is transferred, the set-off mechanisms in the new clause will not be applied to a payment to the current creditor until HMRC has taken all reasonable steps to recover any outstanding liabilities from the original creditor.
	Amendments Nos. 24 to 28 make consequential changes to clauses 128 and 129. I am grateful to officials for their advice. This is one of those moments that occurred relatively seldom in Committee. I send my best wishes to the leader of an exemplary team of officials, and wish him many happy returns of the day on his 31st birthday. I am sure that he is enjoying spending it in our company this evening.
	The hon. Member for South-West Hertfordshire asked whether a motive test had been considered. The simple answer is no. The purpose of the new clause is not to prevent assignments that are genuinely commercial arrangements, or to make them impractical. It simply ensures that the Exchequer does not pay out any more than it would have had the claim been made by the original creditor.
	The hon. Gentleman spoke of what he perceived as the danger of erring too far on one side of the balance between powers and safeguards. The package provides greater consistency across taxes: although there are some extensions of powers, they are matched by tightening in other areas and a strengthening of safeguards. Inevitably there will be tensions as we seek to ensure that HMRC has appropriate powers to work effectively, and that taxpayers have strong safeguards. The balance has changed, but in my opinion it has changed in favour of the taxpayer. The schedule contains 37 statutory safeguards to protect the taxpayer, at the heart of which is the need for all actions carried out by HMRC to be reasonable. We debated that at length in Committee.
	The hon. Gentleman made a valid point about the protections for ordinary, decent taxpayers who might otherwise be badly affected. As I have said repeatedly, if there is any evidence that the changes work detrimentally in the way that he described, I shall wish to act to address that. At the heart of all our proposed changes is the need for HMRC's actions to be reasonable. Guidance will support the safeguards, and will seek to ensure that taxpayers are fully aware of their rights.
	The hon. Member for Taunton (Mr. Browne) said that he would press new clause 19 to a vote. In my opening remarks, I explained at length the interest in the taxpayers' charter, and I want to present proposals in due course. As the hon. Gentleman knows, we are in the early stages of consultation, and I prefer that approach to the one suggested in his new clause. The review of powers aims to include more safeguards in legislation where appropriate, and, as I have said, additional safeguards are set out in codes of practice and operational guidance.
	The hon. Member for South-West Hertfordshire asked how we could be sure that we would have a chance to scrutinise the guidance. HMRC set out the guidance in a timetable in the consultation response document that was issued at the end of March. The codes of practice and the examples were also published in both consultation documents, providing much of the detail needed, and full draft guidance on record-keeping has been published. All those documents are public and can be scrutinised in Parliament in the normal way, although obviously not by means of a legislative process.
	The hon. Gentleman suggested that taxpayers were not clear about what records to keep. Taxpayers have said that they do not want HMRC to be too prescriptive. Its largely generic approach requires records to be kept of income, sales and expenses, but it also allows taxpayers to decide exactly what they need to keep. They are best placed to decide, bearing in mind their own circumstances. What is important is for taxpayers to keep enough records to be able to make accurate tax returns or claims.
	The hon. Gentleman asked what would happen in the event of a dispute. When there is a dispute the taxpayer can tell HMRC, and when there is genuine doubt HMRC will use the written information power that we discussed in Committee. That power would carry a right of appeal in most cases, or it would have to be pre-authorised by an independent tribunal.
	The hon. Gentleman asked why there is no right of appeal against the power to inspect premises. The law says an inspection must be reasonable, and guidance will set out examples of specific cases where an inspection would, or would not, be reasonable. If HMRC breaches that guidance, the taxpayer could either make a formal complaint or refuse to allow the inspection to take place, knowing that for a penalty to be charged HMRC must demonstrate to the tribunal that the inspection was reasonable.
	The IT enhancements planned by HMRC will improve the handling of individuals' tax details and will allow HMRC to identify incorrect payments earlier. That will mean that many overpayments will be repaid automatically without the need for a formal claim. In many such cases, a refund is due whether or not the taxpayer makes a claim, so the time limits to which the amendment refers do not apply.
	I did not address amendment No. 39 in detail as we debated it in Committee. It might be helpful, however, if I make the following comments. The seven days in the proposed legislation is a minimum period of notice, and usually a longer period would be allowed if necessary. We were asked what would happen in the event of a holiday, perhaps of a fortnight. That would not be a problem, as the taxpayers would have a reasonable excuse for delaying a visit until the conclusion of their holiday. Therefore, based on the requirement for HMRC to behave reasonably, the problems described would not arise.
	The new aligned time limits have been warmly welcomed by external stakeholders. The application of the same time limits across taxes will be a useful simplification for taxpayers. They will also allow HMRC to work in a joined-up way across taxes when carrying out checks, which will reduce costs for taxpayers. Most welcome of all has been the earlier certainty for taxpayers that will be provided by reduced time limits as they relate to direct taxes—HMRC will only be able to go back for six years when the taxpayer has not taken reasonable care to get their tax right. Six years is a substantial reduction from the 20 years that currently applies. HMRC will continue to accept later claims when the taxpayer has a reasonable excuse.
	I will keep the effectiveness of HMRC's publicity and the planned pay-as-you-earn system improvements under review to ensure that people are prepared for the new time limits from 1 April 2010. A considerable period of time will pass before the new powers take effect, which is sufficient for not only Parliament, but the representative groups of taxpayers who are also closely scrutinising this work to be satisfied that the powers are appropriate.
	The hon. Member for Dundee, East asked about computer records. As I said in Committee, computer records are no different from paper records. If HMRC wishes to inspect any such documents, they must be relevant to the taxpayer's tax position, and must be in either the taxpayer's or the third party's power or possession, and if they are stored abroad, they must be made available in the UK. All those requirements would be necessary. I know the hon. Gentleman is particularly concerned about where the computer or website, for example, is outside the control of the individual. It would be possible to demonstrate that to HMRC. As I have said to him, HMRC would have to liaise with foreign authorities, perhaps in the jurisdiction where the records are sited, in order to obtain the information through a formal exchange of information. To that extent, the individual taxpayer would step back in order to allow a process of dialogue with the tax authorities in the other jurisdiction to take place. The application of penalties is also no different.
	The hon. Member for Taunton asked about what HMRC is doing to protect taxpayer data. I refer him to the Independent Police Complaints Commission and Poynter reports. There is a long list of steps that HMRC is taking, and I encourage him to look at the reports in detail because they give the scope and nature of those improvements.
	I commend the Government's amendments to the House, and I hope that Members will resist those amendments that the Opposition parties choose to press to a Division.
	 Question put and agreed to.
	 Clause read a Second time, and added to the Bill.

Frank Field: I am grateful for this opportunity to move the new clause and speak to the amendments, but I will not be pressing them to a vote because I have learned that the Conservative Opposition are not going to vote on them tonight, although we have the votes to win. I do not think that it is fair on Labour Members to ask them to vote against their Government just for the sake of it, when we cannot win. So the message can go out clearly to the country that we might well have got change tonight—the Liberal Democrats and the nationalists were coming in with us—but sadly, the Opposition votes have crumbled. There is a case to answer, however, and I very much hope that the Economic Secretary will respond to the main points in the debate.
	When historians write up the Labour Government, the two changes they will pick on as the most lasting are the ban on smoking and the establishment of civil partnerships. Both of them changed in a significant and good way the nature of our society, one because it used the law to set— [ Interruption. ] It is interesting that my hon. Friend the Member for Telford (David Wright) is laughing; we may be so hard pushed at the election that the Government may have to fight it on those measures, so it would be well worth listening. If my seat was marginal I would be desperate to find some good messages to impart to the electorate. Let us return to the debate.
	The law banning smoking has changed behaviour, and with civil partnerships we have rewarded the loyalty and faithfulness of couples of the same sex. When those measures went through we became a more civilised society on both fronts. The new clause would try to extend that approach for siblings who have made a home together, many of whom, as a result of the current duties paid on property at death, have to sell their home and start all over again. I did not table the new clause as a plea that such people should have special tax status or because they are siblings living together, they should be exempt from tax, but merely so that, as for married couples and those in civil partnerships, the tax would be delayed until the second sibling had died.
	Of course, it is right that the Treasury should be worried when well-meaning souls try to move amendments that sound very good on the surface but could be used for tax avoidance purposes. That is why the new clause includes a requirement that siblings would have had to live together for at least 10 years before the provision would take effect. Clearly, given people's ability to manoeuvre around the tax system, if there were no such bar, it would pay them to move in when they knew a sibling was dying. Nobody is in favour of that. We want to reward decent behaviour. Many siblings affected by the current arrangements would undertake civil partnerships if the law allowed them to do so, but it does not.
	I ask Labour Members who oppose the proposal to think back to the time before civil partnerships. There were Members on the Labour Benches, and certainly some on the Conservative Benches, who thought that passing such an Act was against a law of nature, but once it was passed it was extraordinary how quickly people thought of it as a normal arrangement. One should reward such arrangements through the legal or tax systems, as would have occurred if there had been enough votes to support my proposal to give siblings the right to keep their family home until the second sibling dies. That is the point of the new clause, and I hope that I have explained its objectives.
	I fear that a message will go out from the Chamber that there are not enough votes to carry the proposal, but I believe it will be carried before too long, and I look forward with interest to hearing what the Minister and the Conservative spokesman say. I think we may hear a slightly more progressive line from the Liberal Democrats. I commend the new clause to the House.

David Gauke: The hon. Gentleman makes a fair point, although I think that it will fall on both the Minister and Conservative Members to answer the question: why not treat siblings as a separate category, as we rightly do married couples and those in civil partnerships? Our concern has to do with the threshold, but what the Minister says is absolutely right. We are not talking about all siblings who live together; we are talking about those with a relatively large estate. However, equally, it would be fair to say that an estate of £700,000-plus is not necessarily that unusual, and we are not talking about only the very wealthy. That point is worth bearing in mind with regard to inheritance tax more generally.
	As house prices have risen—not so much in recent months, but over the previous 12 to 15 years—many more estates are being affected by inheritance tax. That is a legitimate concern, and I congratulate the right hon. Member for Birkenhead on raising the issue. I certainly see that happening in my constituency: relatively modest houses are now above the inheritance tax threshold, so there is a legitimate concern. Of course, many people who do not have an estate above the threshold aspire to have such an estate. In many respects, because of the way in which inheritance tax has developed over recent years, it now affects far more families and people who hope one day to have an estate of that sort of size.
	There is a legitimate problem with inheritance tax. The most prominent case is that of the sisters from Marlborough, Sybil and Joyce Burden, who have written to every Chancellor of the day since 1976—some eight Chancellors so far, although one suspects that the turnover may increase in the next couple of years or so. The sisters have also taken their case to the European Court of Human Rights, where their application was recently rejected. I personally think that our tax law should be determined by the conclusions of our debates about such matters in this House, not by the European Court of Human Rights in Strasbourg. None the less, the sisters have raised an important issue, particularly in the context of the surviving sibling having to move out to pay the IHT liability.
	I suspect that the Economic Secretary may make two arguments in that context: first, that it is possible to pay off IHT over a period of 10 years or so, and one can defer some of the liability; and secondly, that equity release is available. Some of the equity in the property can be released, but given that many people have saved all their lives to own a property outright, there is, unsurprisingly, a great reluctance to do what essentially is remortgaging part of it to fund a tax liability. My concern with the right hon. Gentleman's proposal is about where precisely we draw the line. The line is currently clear with regard to married couples and civil partners, but what about, for example, long-term carers for elderly parents? The same case about protecting the family home could be made. What about adult disabled children who live with their parents? Again, a humane and reasonable case could be made for them. One is left with the question of where to draw the line.

Jeremy Browne: I wish to draw on a personal experience, which, although not directly relevant, is sufficiently relevant to illuminate our debate. My grandmother, who married Mr. Browne, was called Miss Gray—we are a rather monotone family. She was the oldest of four children and she died in 2000 in the house in which she was born in 1913. There were four children—two boys and two girls. Both sons were killed in the second world war and their names are on the war memorial in the church near the house, and my grandmother and her younger sister, my great aunt, survived. They continued to live in the house in which they were born until the day that they died. My great aunt died more recently.
	My grandmother married Mr. Browne and that is why the example is not directly applicable. However, I wanted to make the case because it is a perfect example of the sort of people whom the new clause would assist. Many women of that age did not get married and had to make different arrangements after the second world war that they would not have had to make in other circumstances, if such a seismic disruption to society's normal development in the United Kingdom had not occurred between 1939 and 1945. Those women made exceptional arrangements. Many were sisters who lived initially with their parents and then, when the parents died in the 1950s and the 1960s, lived together in the houses in which they had been born or brought up. The full implications are felt only when one sister dies many years later—the social legacy of the second world war has lasted many decades. Sisters in those circumstances are aghast that the inheritance tax burden should apply to them. There is therefore a compelling case for the new clause.
	The Economic Secretary said in her intervention on the Conservative spokesman that inheritance tax would apply only to those who lived in what she implied was a posh house, which is worth more than £700,000. I appreciate that the number of houses that are worth that sum is falling by the day. This Government are perhaps trying to tackle the problem of the inheritance tax burden in their unique way. There are probably betters methods, but they are doing their best. The threshold is not yet as high as £700,000, but the moral case is no different for sisters who were born in a house that is now worth £800,000 from that for those living in a house worth £600,000. They did not choose to be born in a house of a specific value—it is their home, the place in which they have lived for many decades, and they expect to live there for the rest of their lives.
	I urge the Economic Secretary not to regard this as a wedge issue, with the Labour party playing to a core constituency and saying, "It doesn't really matter because we're only talking about rich people. They're the sort of people that the Conservatives speak up for and we can distinguish ourselves from them by saying that our priority is not to help rich old people but other groups in society." In the case that we are considering, people in a house now worth £700,000 are just as worthy of support, compassion and assistance as those whose houses are worth a different amount.

Kitty Ussher: I do not know whether that is yet another example of an unfunded spending commitment from the Conservatives, but we felt that 35 years was a fairly decent point at which to draw the line.
	The point of principle is beginning to emerge. We want to make clear that there is something special about marriage that makes it necessary for a nil band rate to apply. While we have sympathy and compassion for elderly people who have been living together for the vast majority of their lives, we feel that in view of the value of the estates concerned, Government intervention is not required except in the circumstances that I have described.
	I welcome the debate, but on that point of principle, I urge the House to reject the new clause.

HMRC Workforce Change

Fraser Kemp: As I was saying, a leading Conservative and Sunderland businessman, Sir Tom Cowie, discussing economic development in the city, said in May 2008:
	"You can't fault the council".
	That is a considerable endorsement from a leading member and supporter of and financial donor to Her Majesty's Opposition.
	We have had some welcome high-profile announcements. The Nissan decision was great news for the constituency. It was announced that Nissan would build its new model at the plant, resulting in hundreds of new jobs not just at the plant but in the supply chain, which is often based around the area. I would also like to place on record my thanks to the Government for their financial contribution to research and development and for ensuring that Nissan had all the support it could possibly ask for from the UK Government. That is a tremendous endorsement and this week the plant announced that it will have to change its shift system because of the unprecedented demand for the models that it makes. That is great news.
	There are many other good news stories. Over the past few years, some 60 international inward projects have come into the city. The projects have recently included Nike, the sports manufacturer, which has announced that its headquarters will be based in the city, accounting for about 15 per cent. of all jobs there. Although we have had setbacks, such as Northern Rock and other closures, in many instances they have been balanced by the additional growth and the announcements of new jobs in the city.
	Manufacturing remains hugely important. It accounts for 26.3 per cent. of all jobs, which should be seen against the backdrop of a national statistic of about 10.9 per cent. We also recognise—perhaps learning from the past when there was a huge dependence on specific industries—that in order to cope in a global environment we need resilience, a wide jobs base and a wide economic base, which will mean that we do not face some of the problems that we have seen in the past. As part of that strategy, Sunderland is internationally recognised as one of the top cities in the world for technology investment.
	A heavy commitment has gone into launching software city, an industry-led initiative supported by city council finance. Some £7 million went into building the new Evolve centre in my constituency, where companies such as the home-grown international Leighton Group, under the leadership of Paul Callaghan, are based and produce innovative software. I visited the company a few weeks ago and was very impressed by what it was doing and by its work force, many of whom lived locally or had gone to local colleges and the university. They were employed in a dynamic and growing company. We were also successful in the UK Government's digital challenge bid, where we got £3.5 million towards community-based projects that deal with technology.
	That has all helped to give us a competitive advantage. It is coupled with the partnership that we enjoy with the private sector. Many people talk about partnership and it is a very popular word, but in our case the partnership is real because it is based on trust. It has not happened in just the past few years, but has been ongoing in the city. We have also provided high-quality premises not just for large employers but for small and medium-sized enterprises, too. The latest of those developments is based at Rainton Bridge in my constituency. The 54-acre site will provide about 850,000 sq ft in space, with a potential for 4,000 jobs and about £100 million in investment. Northern Rock was due to relocate staff there and we await Ron Sandler's restructuring plans, but we remain optimistic that the development will do well.
	I spoke earlier about infrastructure projects, and the city council has submitted a revised business case for improving the highway infrastructure on the central route into the development. The companies on the site supply companies such as Nissan and therefore need good infrastructure. I urge the Minister to speak to colleagues in the Department for Transport to ensure that the council's revised bid gets early consideration and a quick answer.
	Planning permission has just been awarded to Barnston Holdings, part of Nissan Land Holdings, for another 600,000 sq ft site offering 4,000 jobs. Development land is important in many urban areas and I urge the Government to ensure that public bodies such as city councils can identify and purchase sites for development well in advance.
	I also want to mention the effect that the full business rate on unused sites has on development. I understand the reasons, but the matter needs to be reviewed. We should not have detrimental fiscal policies that might act as disincentives to developers prepared to invest heavily, as part of a speculative venture, in new building in the hope of attracting jobs.
	I shall conclude by saying that our record in these matters is a proud one. The achievements speak for themselves, but I pay tribute to the many companies that have come to my constituency and the city of Sunderland. They have put their faith in the area and the people who work for them. Ultimately, it is those companies that provide the jobs, whereas our job is to ensure that there is an excellent business environment for doing business. That is all about working in partnership and ensuring that companies know that we are continually improving our education facilities and skills base.
	One lesson that we have learned is that foresight is very important, as we need to be able to predict, as far as possible, how things will turn out. In the past, economic changes that took 20 or 30 years now happen in five or 10, as many of the rules of the old economic order have gone out of the window.
	I have told the House before that I attended last year's "State of the City" debate in Sunderland, when a young man just leaving school asked me what sort of job he would have in 30 years' time. That made me think, as I left a school in my constituency just over 30 years ago. If someone had told me then that, today, there would be no shipbuilding, that mining would be gone for ever and that the city would produce 400,000 cars a year, 78 per cent. of which would be exported to Europe, I would have been amazed. Indeed, some of the cars even go to Japan: all of that, given the state of the British car industry in the 1970s, made me wonder how to answer that young man.
	We live in a fast moving economy, and we need to develop a public policy that is adaptable and flexible enough to enable us to meet the demands of business. If we do that, we will generate the wealth that our constituents expect will be spent on the services that they need so much.